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The Daily

E&Y Settles with NY Attorney General Over Lehman Bros. Collapse

By:
Chris Gaetano
Published Date:
Apr 16, 2015
Attorny_General_Eric_T_SchneidermanBig Four firm Ernst and Young has agreed to pay the state of New York $10 million in order to settle a suit launched in 2010 by Attorney General Eric Schneiderman that claimed the firm had allowed its client, Lehman Brothers, to manipulate financial information to deceive investors prior to its spectacular collapse in 2008, according to the Wall Street Journal. At issue was Lehman Brothers' use of  Repo 105 agreements, which allowed the company to book loans as sales. Prior to its collapse, Lehman would take out loans to pay down liabilities prior to the financial reporting deadline, present a picture of fiscal stability to the investors, and then pay back the loans afterwards. Ernst and Young at the time was acting as the company's auditor. Schneiderman said that, despite knowing about the use of these agreements, it none the less presented a clean bill of health, which the attorney general said was misleading. Ernst and Young, said the Journal, has repeatedly downplayed its role in Lehman's collapse, and noted that the settlement did not include any findings of wrongdoing by the firm or any of its professionals.