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Lehman Jan 12

    Client Attorney Privileged/Attorney Work Product/At Request of Counsel

    Ernst & Young

  1. Ernst & Young, Starr Reach Deal In Lehman Fraud Row

    Jan 11, 2016 | Law360

    By Beth Winegarner

    Ernst & Young and the investment firm managed by former AIG CEO Maurice "Hank" Greenberg have settled the firm's lawsuit accusing Ernst & Young of helping Lehman Brothers hide tens of billions of dollars in fixed-income securities, according to a New York federal court filing Monday.

    2. Full Text of Stories Below

    Client Attorney Privileged/Attorney Work Product/At Request of Counsel

    Ernst & Young

  1. Ernst & Young, Starr Reach Deal In Lehman Fraud Row

    Jan 11, 2016 | Law360

    By Beth Winegarner

    Ernst & Young and the investment firm managed by former AIG CEO Maurice "Hank" Greenberg have settled the firm's lawsuit accusing Ernst & Young of helping Lehman Brothers hide tens of billions of dollars in fixed-income securities, according to a New York federal court filing Monday.

    ...Starr's initial lawsuit claimed that Ernst & Young handed the collapsed investment bank clean audits year after year even though it knew Lehman used allegedly fraudulent transactions to make its risks appear lower than they actually were. Had the accounting firm properly evaluated Lehman, Starr never would have purchased $200 million worth of the bank's securities, the company said.

    Starr alleged that Lehman hid its so-called Repo 105 transactions in the years leading up to its September 2008 bankruptcy filing. The Repo 105 transactions involved transfers by Lehman of fixed-income securities to European counterparties in return for cash, with an understanding that Lehman would shortly repurchase the equivalent securities, according to the complaint.

    Investigations by regulators into Ernst & Young’s Lehman work are rooted in findings bankruptcy examiner Anton R. Valukas of Jenner & Block LLP released in a report attacking decisions Lehman executives made to buy themselves time after the collapse of The Bear Stearns Cos. Inc. in March 2008. The report highlighted Lehman's use of the Repo 105 deals.

    With the markets shaken from Bear's demise and confidence eroding, the firm “painted a misleading picture of its financial condition,” the report said.

    “Although Repo 105 transactions may not have been inherently improper, there is a colorable claim that their sole function as employed by Lehman was balance sheet manipulation,” the report said.

    Lehman did not disclose the use of the device to its board, the government or ratings agencies, the report said. Ernst & Young was aware but did not question the practice or the fact that Lehman was not disclosing it, according to the report...

    For full story: http://www.law360.com/articles/745343/ernst-young-starr-reach-deal-in-lehman-fraud-row

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