US investors sue E&Y over Lehman woes

by Joanne Christie

20 Nov 2008

  • Comments
lehman brothers

Ernst & Young ‘recklessly disregarded’ the true state of Lehman Brothers’ finances in a bid to secure its continued fees, claims a Californian county suing the firm for its role in the biggest corporate bankruptcy in US history.

San Mateo County Investment Pool, a local government investment pool that suffered a $150m loss when Lehman failed, has named the accountancy giant and various Lehman executives in a lawsuit filed last week. ‘This case represents the worst example of the fraud committed by modern day robber barons of Wall Street, who targeted public entities to finance their risky practices,’ said the court filings.

Lead counsel for the plaintiff Joseph W Cotchett said he felt the plaintiff’s chances of recovering some of their losses were ‘good’.

According to the lawsuit, E&Y ‘chose to look the other way and give its stamp of approval to Lehman’s financial condition and risk exposure, rather than risk losing lucrative accounting and auditing fees – estimated at $31m in 2007 alone’. It accuses the auditor of making ‘materially misleading’ statements and says ‘E&Y knew or recklessly disregarded the true financial condition of Lehman’.

A US spokesperson for E&Y was dismissive of the case. ‘The complaint has no merit. Lehman Brothers’ demise was triggered by dramatic and unprecedented market events that continue to be felt throughout the world.’

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send

Appointments to University Committees

University of Glasgow 120x60University of Glasgow - Glasgow - unremunerated positions

 

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.