E&Y cleared in Lehman Brothers investigation

ACCOUNTANCY’S WATCHDOG has announced that no action will be taken against Ernst & Young or any individuals in connection with the audit of Lehman Brothers International Europe (LBIE).

The disciplinary arm of the Financial Reporting Council, the Accountancy and Actuarial Discipline Board (AADB), said: “There is no realistic prospect that a tribunal would make an adverse finding against Ernst & Young in the UK or members within that firm.

“The investigation will therefore be closed and no further action taken.”

Audit files, information from E&Y UK staff members’ laptops, and emails and data from other regulators were investigated. E&Y UK’s audit team staff and former members of LBIE were also interviewed.

The AADB began the investigation of E&Y’s role in reporting to the FSA on audit client LBIE’s compliance with the authority’s client asset rules, which governed the protection of client money in mid-2010.

Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PwC, were appointed joint administrators to LBIE on 15 September 2008 – the US arm filed for bankruptcy in early September 2008.

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