Jeff Blackler/Rex Features
The lawsuit alleges that the company "has contributed to massive accounting fraud" and helped Lehman Brothers hide the real size of their debts. Representatives of Ernst & Young and the prosecutor's office declined to comment.
One of the largest investment banks Lehman Brothers with assets by $ 639 billion filed for bankruptcy Sept. 15, 2008, which caused panic in global financial markets.
Checking in respect of Ernst & Young was launched in 2010, after New York Attorney Andrew Cuomo filed a civil lawsuit against the accounting firm accusing in help Lehman Brothers perform manipulation statements, which, according to US authorities, the investment company allowed to embellish their financial situation reported The Wall Street Journal on Wednesday.
Lehman went bankrupt in September 2008, what was one of the turning points in the development of the global financial crisis.
The auditor worked with the company from 2001 to 2008. According to the prosecutor, Ernst & Young allegedly knew about the use of client accounting tricks called Repo 105, which allows to display for the balance of debt by repo transactions.
These transactions, although represented only a short-term financing, however, were carried out as the sale of securities; received funds were directed at reducing the debt. Immediately after the reporting date, securities were bought back, said Interfax. According to the prosecutor, it was done for the purpose of reporting embellishments and misleading the investor.
Ernst & Young, according to the company, believes that this kind of accusation has no evidence or legal basis. The auditor has already stated that the client’s reporting was conducted in accordance with generally accepted accounting principles, and that the statements are not a cause of Lehman bankruptcy. The company intends to vigorously defend his innocence in court.
According to the WSJ, the relationship between Ernst & Young and Lehman were advantageous to both parties. During the ten years of cooperation, until 2007, the auditor earned more than $ 185 million.
source: reuters.com
One of the largest investment banks Lehman Brothers with assets by $ 639 billion filed for bankruptcy Sept. 15, 2008, which caused panic in global financial markets.
Checking in respect of Ernst & Young was launched in 2010, after New York Attorney Andrew Cuomo filed a civil lawsuit against the accounting firm accusing in help Lehman Brothers perform manipulation statements, which, according to US authorities, the investment company allowed to embellish their financial situation reported The Wall Street Journal on Wednesday.
Lehman went bankrupt in September 2008, what was one of the turning points in the development of the global financial crisis.
The auditor worked with the company from 2001 to 2008. According to the prosecutor, Ernst & Young allegedly knew about the use of client accounting tricks called Repo 105, which allows to display for the balance of debt by repo transactions.
These transactions, although represented only a short-term financing, however, were carried out as the sale of securities; received funds were directed at reducing the debt. Immediately after the reporting date, securities were bought back, said Interfax. According to the prosecutor, it was done for the purpose of reporting embellishments and misleading the investor.
Ernst & Young, according to the company, believes that this kind of accusation has no evidence or legal basis. The auditor has already stated that the client’s reporting was conducted in accordance with generally accepted accounting principles, and that the statements are not a cause of Lehman bankruptcy. The company intends to vigorously defend his innocence in court.
According to the WSJ, the relationship between Ernst & Young and Lehman were advantageous to both parties. During the ten years of cooperation, until 2007, the auditor earned more than $ 185 million.
source: reuters.com
