Ernst & Young Faces Suit Anew

Wednesday, October 12, 2011 Print Email

Accounting firm Ernst & Young is facing another suit in relation to the collapse of Lehman Brothers during the 2008 financial crisis, this time filed by New Jersey officials.

On December 2010, New York State Attorney General Andrew Cuomo found negligence on the part of Ernst & Young on the alleged fraud committed by Lehman Brothers to its investors. The accounting firm was charged with helping Lehman in misrepresenting its financial status prior to the 2008 global economic crisis, making it appear healthier when it actually was on the verge of falling.

Now, NJ state officials renewed their suit against Ernst & Young on Tuesday over claims that the accounting firm aided in hiding the ailing financial condition of Lehman Brothers while the bank’s officials continued to attract investors to pour in cash.

New Jersey’s investment division subsequently shelled out $385 million to Lehman Brothers before it plummeted in 2008, thereby losing more than $192 million.

the state lawsuit claimed, among others, that Ernst & Young, Lehman’s former independent auditor, made misstatements in a July 2008 financial report about Lehman’s compliance with accounting rules.

However, this was denied by Ernst & Young spokesman Charlie Perkins, saying the firm always acted properly.

Source: In Audit

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