WASHINGTON - Big accounting firm Ernst & Young has agreed to pay $8.5 million to settle federal regulators' charges in connection with an alleged accounting fraud at Bally Total Fitness in 2001-2003. The Securities and Exchange Commission announced the settlement Thursday with Ernst & Young, which also agreed to change its policies and practices to prevent future problems. Officials said it was one of the largest settlements ever paid by an accounting firm. The SEC had alleged that Ernst & Young knew or should have known about Bally's accounting violations. New York-based Ernst & Young neither admitted nor denied the SEC's allegations but did agree to refrain from future violations of the securities laws.

- Associated Press