PracticeAuditErnst & Young US named in Lehman suit

Ernst & Young US named in Lehman suit

Reports indicate Ernst & Young is named in investor suit over Lehman accounting

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Ernst & Young, auditor of Lehman Brothers, has been named in a law suit brought over the accounting at the collapsed bank, according to reports from news agencies.

A report on Reuters citing Bloomberg news said the suit has been brought by investors seeking to recover money from executives and underwriters.

A statment quoted by Reuters from E&Y said the firm believed it had “met all aplicable work standards” and aplied the rules that existed at the time.

The claims against E&Y have emerged following publication of a report from the court appointed bankruptcy examiner Anton Valukas which alleged E& Y auditors were negligent in the audit of Lehmans and the use of so called Repo 105 transaction.

The transaction raise short term funding but also allegedly allowed Lehman to remove billions of dollars worth of risky assets from its balance sheet, according to the report.

E&Y in its reported statement said Valukas acknowledged the collapse of the bank was caused by a liquidity crisis, not the accounting.

Read more:

Lehman Special report

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