Ernst & Young in lawsuit over Lehman collapse

| December 22, 2010 | 0 Comments
Ernst & Young in lawsuit over Lehman collapse

London-based accountancy giant, Ernst & Young, is being sued by New York’s attorney general over the collapse of the investment bank Lehman Brothers.

Lehman Brothers collapsed in September 2008, which then led to a crisis that swept through global financial markets.

It has been claimed that Ernst & Young used an accounting method known as “Repo 105” to temporarily remove $50 billion of assets from its balance sheet and the accountancy firm has previously been accused of negligence.

However, Ernst & Young has said it will “vigorously defend” itself and said “there is no factual or legal basis for a claim to be brought against an auditor in this context.”

It added: “Lehman’s bankruptcy was not caused by any accounting issues.”

However, Ernst & Young could settle with the attorney general out of court, rather than be drawn into a long and expensive court battle, according to many experts.

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