E&Y sued over US Lehman audit

A US investment pool has sued Lehman executives and the auditor of Ernst & Young for more than $150m (£101m) for fraud and misleading accounting practices.

The San Mateo County Investment Pool has alleged that US Lehman's executives made public claims about the company's financial strength, yet was privately struggling for survival, reported Dow Jones.

Lehman attempted to conceal its losses with the help of Ernst & Young, according to the suit signed by Joseph Cotchett, the lead counsel retained by the county.

'The defendants focused their efforts on trying to save their company and their jobs with little or no regard to how their egregious actions harmed those who in good faith invested in Lehman Brothers,' said San Mateo County Counsel Michael Murphy.

Lehman chief executive Richard S Fuld Jr, former CFOs Christopher M O'Meara and Erin Callan, former president Joseph M Gregory, other directors and Ernst & Young were named in the suit.

An Ernst & Young spokesman said in a statement: 'The complaint has no merit. Lehman Brothers' demise was triggered by dramatic and unprecedented market events that continue to be felt throughout the world.'

Lehman's representatives were unavailable for comment at the time of writing.

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