Part II: Merry-Go-Round. Additional charges made against E&Y included the following (r...

Part II: Merry-Go-Round. Additional charges made against E&Y included the following (recall that MGR hired E&Y for turnaround consulting services):

• E&Y had a close relationship with Rouse Co., one of MGR’s primary landlords (E&Y was soliciting business from Rouse and provided significant tax services).

• Swidler (the law firm that recommended E&Y to MGR) and E&Y had participated in at least 12 different business arrangements, some of which resulted in Swidler receiving significant fees from E&Y.

• E&Y did not disclose either of these relationships to MGR.

Required:

a. Do you think that E&Y acted unethically, given that it had these relationships?

---

b. How could these relationships have affected E&Y’s advice to MGR? In other words, refer to the charges above and speculate as to whether any of the charges against E&Y may have stemmed from the relationships described above.

To assist you in answering this question, consider the articles about MGR in footnote 10.