Wednesday, September 14, 2011

Ernst & Young and Lehman Case is Still Cooking

Fox News published a short article about litigation involving Lehman and its executives and mentioned that the lawsuit against EY is still progressing. The article says that testimony may be recorded in the near future about the motivation for Lehman's extensive use of Repo 105 transactions. Here are a few quotes:
The New York Attorney General’s office is ramping up its investigation of the Lehman Brothers September 2008 bankruptcy, according to people with direct knowledge of the matter. These people say the office is preparing to take testimony from witnesses about how top executives managed the firm’s finances, including their use of a controversial accounting technique known as Repo 105 in the months prior to the bankruptcy filing...
Much of the New York AG’s suit involves Ernst & Young’s approval of Lehman’s use of Repo 105, which according to the civil complaint, helped disguise serious financial problems at the firm from investors in the months preceding the bankruptcy...
(A)ttorneys for witnesses who have already given testimony to the state AG’s office in the Ernst and Young case say their clients are being called back to provide more information, and the focus of the state AG has shifted more toward what senior Lehman executives did during those months leading up to the firm’s collapse, says one person with direct knowledge of the matter.
At least one witness slated to give testimony in the coming weeks expects to be asked about what motives senior Lehman executives had for using Repo 105, according to a person with direct knowledge of the matter.
News about this lawsuit has been quiet from what I can tell. If anyone knows more about what's happening, feel free to shoot us an email.

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