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Lehman April 16
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Ernst & Young Reaches Settlement With N.Y. Attorney General
Apr 15, 2015 | The Wall Street Journal
By Michael Rapoport
Ernst & Young LLP agreed Wednesday to pay $10 million to settle allegations from the New York attorney general’s office that the Big Four accounting firm had turned a blind eye when its client Lehman Brothers Holdings Inc. misled investors before its 2008 collapse. The settlement resolves a 2010 lawsuit in which the attorney general’s office... -
Ernst & Young in Settlement Over Lehman Brothers
Apr 16, 2015 | The New York Times - Dealbook
By Matthew Goldstein
Another loose end stemming from the collapse of Lehman Brothers was wrapped up on Wednesday as Ernst & Young agreed to pay $10 million to settle a four-year-old lawsuit brought by New York State authorities. The settlement between the big accounting firm and Eric T. Schneiderman, the New York State attorney general, resolves civil ... -
Ernst & Young to Pay $10 Million to End N.Y. Lehman Suit
Apr 15, 2015 | Bloomberg
By Christie Smythe
Ernst & Young LLP agreed to pay $10 million to settle New York’s lawsuit accusing it of helping Lehman Brothers Holdings Inc. hide financial problems in the years leading to its 2008 collapse. The auditing firm was accused of enabling the investment bank to temporarily remove tens of billions of dollars of securities from its balance sheet... -
Ernst & Young Settles With N.Y. for $10 Million Over Lehman Auditing
Apr 15, 2015 | Reuters
By Karen Freifeld
Ernst & Young LLP [ERNY.UL] will pay $10 million (7 million pounds) to settle a New York lawsuit accusing the accounting firm of helping Lehman Brothers Holdings Inc [LEHMB.UL] deceive investors in the years leading up to its 2008 collapse, the New York attorney general said on Wednesday. -
Ernst & Young Strikes $10M Deal In NY AG's Lehman Suit
Apr 15, 2015 | Law360
By Jacob Batchelor
Ernst & Young LLP will pay $10 million to settle a New York state court suit alleging it helped the now-defunct Lehman Brothers Holdings Inc. cook its books in the runup to the firm's collapse in 2008, New York Attorney General Eric. T. Schneiderman said Wednesday. The decision to settle the suit, which was filed in 2010, came nearly two... -
Ernst & Young to Pay $10m Over Lehman Accounting
Apr 15, 2015 | Financial Times
Ernst & Young will pay a $10m penalty to settle allegations it approved fraudulent financial statements from Lehman Brothers, whose collapse proved the trigger point for the 2008 financial crisis, the New York state attorney general said. The auditing firm was sued by New York prosecutors in 2010 of approving Lehman's accounting for certain... -
NY Settles Suit Against Ernst & Young Over Lehman Audit
Apr 15, 2015 | AP (in CNBC)
New York's attorney general has settled a lawsuit against Ernst & Young over auditing at the now-defunct investment bank Lehman Brothers for $10 million. The attorney general's office says that will help pay restitution to investors in Lehman securities, along with $99 million Ernst & Young is paying to settle a federal class action. -
Ernst & Young Settles With New York Over Lehman Brothers Repo 105 Deals
Apr 15, 2015 | Forbes
By Antoine Gara
Accounting firm Ernst & Young will pay $10 million to settle claims made by the State of New York it was complicit in enabling now-defunct investment bank Lehman Brothers to conceal its financial difficulties ahead of the firm’s September 2008 collapse. The settlement involves so-called Repo 105 transactions, which allowed the bank to... -
Ernst & Young Settles Lehman Case for $10 Million
Apr 15, 2015 | CBS News - MoneyWatch
By Mitch Lipka
Auditing firm Ernst & Young agreed to a $10 million settlement over its alleged role in a fraud involving now-defunct Lehman Brothers Holdings, the New York Attorney General's Office announced on Wednesday. The bulk of the $10 million will be paid to Lehman investors as restitution. That's on top of another $99 million Ernst & Young ... -
Ernst & Young Settles With N.Y. for $10 Million Over Lehman Auditing
Apr 15, 2015 | Metro
By Karen Freifeld
Ernst & Young LLP will pay $10 million to settle a New York lawsuit accusing the accounting firm of helping Lehman Brothers Holdings Inc deceive investors in the years leading up to its 2008 collapse, the New York attorney general said on Wednesday. The 2010 lawsuit claimed Ernst & Young's auditing facilitated a "massive accounting fraud" and...
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Ernst & Young
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Ernst & Young Reaches Settlement With N.Y. Attorney General
Apr 15, 2015 | The Wall Street Journal
By Michael Rapoport
Ernst & Young LLP agreed Wednesday to pay $10 million to settle allegations from the New York attorney general’s office that the Big Four accounting firm had turned a blind eye when its client Lehman Brothers Holdings Inc. misled investors before its 2008 collapse.
The settlement resolves a 2010 lawsuit in which the attorney general’s office alleged that Ernst & Young, Lehman’s outside auditor, allowed the big investment bank to use an accounting maneuver dubbed “Repo 105” that made it appear healthier and less risk-laden than it actually was.
“Auditors will be held accountable when they violate the law, just as they are supposed to hold the companies they audit accountable,” Attorney General Eric Schneiderman said in a statement.
But Ernst & Young noted that the settlement didn’t include any findings of wrongdoing by the firm or any of its professionals. “After many years of costly litigation we are pleased to put this matter behind us,” Ernst & Young said in a statement.
The firm has consistently maintained that accounting issues didn’t cause Lehman’s failure, and that it was always clear to investors that Lehman was a risky, highly leveraged company. It didn’t admit or deny wrongdoing.
The settlement marks a subdued ending to a high-profile case that showed the difficulties regulators had assigning blame for the 2008 collapse of Lehman Brothers, which helped precipitate the 2008 financial crisis. No former Lehman executive has ever faced criminal or civil charges over the firm’s collapse, even though a 2010 bankruptcy-court examiner’s report found there were credible potential legal claims against several people at Lehman as well as against Ernst & Young.
Ernst & Young had previously agreed in 2013 to pay $99 million to settle class-action litigation from Lehman investors over the same issues. Most of the $10 million in the latest settlement will also be distributed to Lehman investors, the attorney general’s office said, minus some amounts to reimburse New York state for investigation and litigation costs.
Repo 105 was a tactic Lehman used for years before its collapse, under which it treated short-term securities-repurchase agreements as sales of the securities, instead of as financings. That took as much as $50 billion in assets off Lehman’s balance sheet, and Lehman used the funds it got from the transactions to pay down billions of dollars in liabilities—thus “temporarily and misleadingly” reducing Lehman’s apparent leverage, the attorney general’s office said...
For full story:
http://www.wsj.com/articles/ernst-young-n-y-attorney-general-close-to-10-million-settlement-over-lehman-1429116634
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Ernst & Young in Settlement Over Lehman Brothers
Apr 16, 2015 | The New York Times - Dealbook
By Matthew Goldstein
Another loose end stemming from the collapse of Lehman Brothers was wrapped up on Wednesday as Ernst & Young agreed to pay $10 million to settle a four-year-old lawsuit brought by New York State authorities.
The settlement between the big accounting firm and Eric T. Schneiderman, the New York State attorney general, resolves civil allegations that Ernst helped Lehman engineer an accounting fraud that made the Wall Street firm appear less leveraged than it really was in the months before its September 2008 bankruptcy filing.
The money being paid by Ernst, which will go to both Lehman investors and the state, is considerably less than the roughly $150 million that state officials had hoped to recoup when the lawsuit was filed by Andrew M. Cuomo just as he was leaving the attorney general’s office to become governor of New York.
Mr. Schneiderman, in a statement announcing the settlement, said, “Auditors will be held accountable when they violate the law.”
Mr. Cuomo filed the lawsuit in December 2010, several months after the court-appointed examiner in the Lehman bankruptcy found that its management used a series of end-of-the quarter transactions called Repo 105 to manipulate the firm’s leverage levels at the end of each quarter. The report by Anton R. Valukas, a former federal prosecutor, presented something of a road map for regulators to pursue lawsuits against Lehman and its auditor over the adjustments that resulted in temporary shifts of tens of billions of debt off the Wall Street firm’s balance sheet at the end of every quarter.
But the Securities and Exchange Commission in 2012 closed its investigation into the collapse of Lehman and the Repo 105 balance sheet maneuvers without filing a lawsuit. And in April 2014, an arbitration panel said it found no basis for a malpractice claim brought by the Lehman bankruptcy estate against Ernst over the firm’s collapse and the Repo 105 transactions...
For full story:
http://www.nytimes.com/2015/04/16/business/dealbook/ernst-young-in-settlement-over-lehman-brothers.html?_r=0
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Ernst & Young to Pay $10 Million to End N.Y. Lehman Suit
Apr 15, 2015 | Bloomberg
By Christie Smythe
Ernst & Young LLP agreed to pay $10 million to settle New York’s lawsuit accusing it of helping Lehman Brothers Holdings Inc. hide financial problems in the years leading to its 2008 collapse.
The auditing firm was accused of enabling the investment bank to temporarily remove tens of billions of dollars of securities from its balance sheet, providing an illusion of stronger financial health.
“Auditors will be held accountable when they violate the law, just as they are supposed to hold the companies they audit accountable,” New York Attorney General Eric Schneiderman said Wednesday.
Amy Call Well, an Ernst & Young spokeswoman, said in an e-mailed statement that the company is “pleased to put this matter behind us” and there were “no findings of wrongdoing” by the firm or its professionals.
Andrew Cuomo, the attorney general in 2010, accused the firm of facilitating a “major accounting fraud” by helping Lehman deceive the public about its financial condition in the lawsuit. The state had sought as much as $125 million in professional fees that Ernst & Young collected from 2001 through the 2008 bankruptcy, along with damages for Lehman shareholders, according to court filings.
With Ernst & Young’s help, Lehman purportedly used so-called Repo 105 transactions to remove the securities and help conceal debt. Repo 105 transactions are a form of short-term financing that Lehman used to temporarily move as much as $50 billion off Lehman’s balance sheet, according to a bankruptcy examiner’s report. Investor Settlement
The firm in 2013 agreed to pay investors $99 million to settle litigation over its auditing of Lehman. Most of the money collected by New York will also be distributed to investors, Schneiderman said...
For full story:
http://www.bloomberg.com/news/articles/2015-04-15/ernst-young-agrees-to-pay-10-million-to-end-n-y-lehman-suit
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Ernst & Young Settles With N.Y. for $10 Million Over Lehman Auditing
Apr 15, 2015 | Reuters
By Karen Freifeld
Ernst & Young LLP [ERNY.UL] will pay $10 million (7 million pounds) to settle a New York lawsuit accusing the accounting firm of helping Lehman Brothers Holdings Inc [LEHMB.UL] deceive investors in the years leading up to its 2008 collapse, the New York attorney general said on Wednesday.
The 2010 lawsuit claimed Ernst & Young's auditing facilitated a "massive accounting fraud" and sought $150 million in fees that the firm earned from Lehman between 2001 and 2008, plus investor damages and equitable relief.
While the $10 million was much smaller than what the attorney general's office had sought, Ernst & Young agreed to pay $99 million in damages to investors in a class action settlement approved a year ago.
The case was the only action by a law enforcement authority in connection with Lehman's 2008 collapse, New York Attorney General Eric Schneiderman said in a statement.
"If auditors' reports...provide cover for their clients by helping to hide material information, that harms the investing public, our economy and our country," Schneiderman said.
Nearly all the $10 million will go to investors in Lehman securities, the office said.
The case was the last significant lawsuit against Ernst & Young over Lehman, according to a spokeswoman for the accounting firm.
"After many years of costly litigation, we are pleased to put this matter behind us, with no findings of wrongdoing by EY or any of its professionals," the firm said in a statement.
According to the complaint, Ernst approved the "surreptitious" removal of tens of billions of dollars of debt from Lehman's balance sheet to make the investment bank appear less indebted at the close of financial quarters.
Lehman filed for bankruptcy on Sept. 15, 2008, helping to trigger the global financial crisis. Once the fourth-largest U.S. investment bank, Lehman held large quantities of risky subprime mortgage securities.
The complaint alleged that, for more than seven years before Lehman's bankruptcy, the bank made use of transactions known as "Repo 105s," short-term financing that temporarily moved as much as $50 billion from its balance sheet.
The lawsuit followed a report about the transactions by former federal prosecutor Anton R. Valukas, who served as a bankruptcy court examiner for Lehman.
The attorney general's office took more than a dozen depositions in the case and elicited information that also helped the earlier class action, the office said.
Ernst & Young last month agreed in principle to settle lawsuits filed by New Jersey and California municipalities over their losses from the Lehman collapse.
A year ago, an arbitration panel found no basis for a Lehman malpractice claim against Ernst, ruling that any wrongdoing linked to the accounting maneuver was "overwhelmingly attributable to Lehman."
"Lehman's audited financial statements clearly portrayed Lehman as what it was - a highly leveraged entity operating in a risky and volatile industry; and Lehman's bankruptcy was not caused by any accounting issues," Ernst & Young said in a statement after the class action settlement...
For full story:
http://uk.reuters.com/article/2015/04/15/uk-ernst-lehman-bros-idUKKBN0N61SO20150415
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Ernst & Young Strikes $10M Deal In NY AG's Lehman Suit
Apr 15, 2015 | Law360
By Jacob Batchelor
Ernst & Young LLP will pay $10 million to settle a New York state court suit alleging it helped the now-defunct Lehman Brothers Holdings Inc. cook its books in the runup to the firm's collapse in 2008, New York Attorney General Eric. T. Schneiderman said Wednesday.
The decision to settle the suit, which was filed in 2010, came nearly two months after a New York appeals court ruled that Schneiderman could pursue a disgorgement claim over $150 million in fees the auditing firm earned for its work with Lehman.
The $10 million settlement will go largely towards restitution for investors in Lehman securities, adding to the $99 million Ernst & Young agreed to pay as part of a federal class action settlement in October 2013.
"The basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public," Schneiderman said. "Auditors will be held accountable when they violate the law, just as they are supposed to hold the companies they audit accountable."
Former New York attorney general and current Gov. Andrew Cuomo originally sued Ernst & Young in New York state court in December 2010, accusing it of helping Lehman secretly remove tens of billions of dollars' worth of fixed-income securities from its balance sheets.
The state alleged that Ernst & Young violated the Martin Act by helping Lehman hide its so-called Repo 105 transactions in the years leading up to its September 2008 bankruptcy filing. Those transactions involved Lehman's transfers of fixed-income securities to European counterparties in return for cash, with an understanding that Lehman would shortly repurchase the equivalent securities, the complaint said.
In announcing the settlement, Schneiderman said that this was the sole enforcement action brought in connection with the 2008 collapse of Lehman, and that the suit was the first filed against an auditor of a public company under New York state securities laws.
In addition to the $99 million federal court settlement, Ernst & Young has previously agreed to settlements in related cases, including a May 2014 settlement with California Public Employees' Retirement System, which purchased more than $700 million in Lehman bonds before its collapse.
Ernst & Young also agreed in March to settle suits brought by municipalities in New Jersey and California, according to documents in New York federal court.
The auditor has not previously admitted wrongdoing as part of the settlements, and the company told Law360 on Wednesday that it admits no wrongdoing in this deal...For full story:
http://www.law360.com/articles/643507/ernst-young-strikes-10m-deal-in-ny-ag-s-lehman-suit-
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Ernst & Young to Pay $10m Over Lehman Accounting
Apr 15, 2015 | Financial Times
Ernst & Young will pay a $10m penalty to settle allegations it approved fraudulent financial statements from Lehman Brothers, whose collapse proved the trigger point for the 2008 financial crisis, the New York state attorney general said.
The auditing firm was sued by New York prosecutors in 2010 of approving Lehman's accounting for certain transactions that weren't booked on the bank's balance sheet, helping to mask the scale of its liabilities, Gina Chon reports from Washington.
Eric Schneiderman, the New York attorney general, said on Wednesday:
If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy, and our country
Lehman's bankruptcy in September 2008 fanned a financial crisis that had been brewing on Wall Street since US house prices began falling, hitting the value of billions of dollars of mortgage-backed bonds owned by banks...
For full story:
http://www.ft.com/intl/fastft/308632/ernst-and-young-pay-10m-over-lehman-accounting
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NY Settles Suit Against Ernst & Young Over Lehman Audit
Apr 15, 2015 | AP (in CNBC)
New York's attorney general has settled a lawsuit against Ernst & Young over auditing at the now-defunct investment bank Lehman Brothers for $10 million.
The attorney general's office says that will help pay restitution to investors in Lehman securities, along with $99 million Ernst & Young is paying to settle a federal class action.
Authorities say the bank transferred securities to overseas entities in return for cash, with an understanding it would quickly repurchase them. But it showed them as sales, used the money to pay down liabilities and temporarily presented misleading impressions of its financial health...
For full story:
http://www.cnbc.com/id/102590548
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Ernst & Young Settles With New York Over Lehman Brothers Repo 105 Deals
Apr 15, 2015 | Forbes
By Antoine Gara
Accounting firm Ernst & Young will pay $10 million to settle claims made by the State of New York it was complicit in enabling now-defunct investment bank Lehman Brothers to conceal its financial difficulties ahead of the firm’s September 2008 collapse. The settlement involves so-called Repo 105 transactions, which allowed the bank to temporarily remove tens of billions of dollars of securities from its balance sheet without disclosing the maneuvers to investors.
In a suit first brought by then attorney general and current governor Andrew Cuomo, the state alleged that E&Y approved Lehman’s accounting transactions and certified the bank’s financial statements despite knowing that the bank was not disclosing the Repo 105 transactions to investors in publicly disclosed financial statements. The state’s suit, brought under an arcane New York law called the Martin Act, initially sought $150 million from E&Y.
About Wednesday’s settlement, New York Attorney General Eric Schneiderman said, “the basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public. If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy, and our country.”
After the collapse of Lehman Brothers, the Repo 105 transactions were seen as a way to prove the bank acted fraudulently in its demise, instead of simply suffering from major strategic blunders and a historic market panic.
The Securities and Exchange Commission opened an investigation into the accounting gimmick, which allowed Lehman to sell securities at quarter end so as to exclude them from its balance sheet and then repurchase the same securities days later. However, in 2012 the SEC closed its investigation without bringing suit...
For full story:
http://www.forbes.com/sites/antoinegara/2015/04/15/ernst-young-settles-new-york-lehman-brothers-repo-105-deals/
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Ernst & Young Settles Lehman Case for $10 Million
Apr 15, 2015 | CBS News - MoneyWatch
By Mitch Lipka
Auditing firm Ernst & Young agreed to a $10 million settlement over its alleged role in a fraud involving now-defunct Lehman Brothers Holdings, the New York Attorney General's Office announced on Wednesday.
The bulk of the $10 million will be paid to Lehman investors as restitution. That's on top of another $99 million Ernst & Young agreed to pay to settle a related class action. Lehman Brothers went under in 2008, one of the sparks that ignited the global financial crisis.
The settlement of the state lawsuit, filed in 2010, closes out the first case filed against the auditor of a public company under New York securities laws, the Attorney General's office said.
"The basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public," Attorney General Eric T. Schneiderman said in a statement. "If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy, and our country."
Ernst & Young allegedly participated in a scheme involving Lehman Brothers getting paid cash in overseas transactions for securities that it would quickly buy back. Those transactions were used as a reason to remove "tens of billions of dollars" in securities from the company's balance sheets...
For full story:
http://www.cbsnews.com/news/10-million-settlement-reached-in-case-against-ernst-young/
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Ernst & Young Settles With N.Y. for $10 Million Over Lehman Auditing
Apr 15, 2015 | Metro
By Karen Freifeld
Ernst & Young LLP will pay $10 million to settle a New York lawsuit accusing the accounting firm of helping Lehman Brothers Holdings Inc deceive investors in the years leading up to its 2008 collapse, the New York attorney general said on Wednesday.
The 2010 lawsuit claimed Ernst & Young's auditing facilitated a "massive accounting fraud" and sought $150 million in fees that the firm earned from Lehman between 2001 and 2008, plus investor damages and equitable relief.
While the $10 million was much smaller than what the attorney general's office had sought, Ernst & Young agreed to pay $99 million in damages to investors in a class action settlement approved a year ago.
The case was the only action by a law enforcement authority in connection with Lehman's 2008 collapse, New York Attorney General Eric Schneiderman said in a statement.
"If auditors' reports...provide cover for their clients by helping to hide material information, that harms the investing public, our economy and our country," Schneiderman said.
Nearly all the $10 million will go to investors in Lehman securities, the office said.
The case was the last significant lawsuit against Ernst & Young over Lehman, according to a spokeswoman for the accounting firm.
"After many years of costly litigation, we are pleased to put this matter behind us, with no findings of wrongdoing by EY or any of its professionals," the firm said in a statement.
According to the complaint, Ernst approved the "surreptitious" removal of tens of billions of dollars of debt from Lehman's balance sheet to make the investment bank appear less indebted at the close of financial quarters.
Lehman filed for bankruptcy on Sept. 15, 2008, helping to trigger the global financial crisis. Once the fourth-largest U.S. investment bank, Lehman held large quantities of risky subprime mortgage securities.
The complaint alleged that, for more than seven years before Lehman's bankruptcy, the bank made use of transactions known as "Repo 105s," short-term financing that temporarily moved as much as $50 billion from its balance sheet.
The lawsuit followed a report about the transactions by former federal prosecutor Anton R. Valukas, who served as a bankruptcy court examiner for Lehman.
The attorney general's office took more than a dozen depositions in the case and elicited information that also helped the earlier class action, the office said.
Ernst & Young last month agreed in principle to settle lawsuits filed by New Jersey and California municipalities over their losses from the Lehman collapse.
A year ago, an arbitration panel found no basis for a Lehman malpractice claim against Ernst, ruling that any wrongdoing linked to the accounting maneuver was "overwhelmingly attributable to Lehman."
"Lehman's audited financial statements clearly portrayed Lehman as what it was - a highly leveraged entity operating in a risky and volatile industry; and Lehman's bankruptcy was not caused by any accounting issues," Ernst & Young said in a statement after the class action settlement...
For full story:
http://www.metro.us/news/ernst-young-settles-with-n-y-for-10-million-over-lehman-auditing/NHFodo---hZuO6NlfR0OCi4jOatdK3A/
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Ernst & Young
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