backOn November 1, 2023, in litigation involving the Federal Deposit Insurance Corporation as Receiver for First NBC Bank (“FDIC-R”) and Ernst & Young LLP (“EY”), the Eastern District of Louisiana approved the FDIC-R’s plan for destroying documents the Fifth Circuit previously found were improperly received from the Public Company Accounting Oversight Board (“PCAOB”). The Fifth Circuit’s October 26, 2020, decision was covered in our October 30, 2020, Bulletin.
The documents in question included the following confidential and privileged information relating to PCAOB’s investigation into financial statement audits performed by EY: 1) PCAOB deposition transcripts; 2) internal EY documents relating to personnel reviews, audit reviews, and firm audit guidance; 3) emails produced to the PCAOB by EY; and 4) EY’s work papers and attachments for the audits (collectively the “PCAOB Materials”). The FDIC-R proposed to destroy the PCAOB Materials, including internal summaries, analyses, and documents that contain information derived from the PCAOB Materials, except for files duplicative of those received directly from EY and administrative depositions of EY personnel taken by the FDIC-R’s counsel. EY opposed FDIC-R’s plan, arguing in part that the administrative depositions were “tainted” because the FDIC-R’s since-disqualified counsel reviewed the PCAOB Materials in preparation for the depositions. Noting that, “the Court does not take lightly EY’s concern that tainted counsel conducted [the] administrative depositions,” the Court nonetheless confirmed FDIC-R’s plan over EY’s objection, reserving the right to strike deposition testimony in the future, “should it be shown that any portions of the testimony did in fact result from the PCAOB materials or upon a showing that the testimony is prejudicial or otherwise impermissible.”
The case is Federal Deposit Insurance Corporation v. Ernst & Young LLP et al, No. 20-cv-1259. A copy of the Order is attached here.