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News >> Business Ethics and Corporate Culture >> Auditor Settles Allegations Regarding Approval of Financial Statements by Lehman

15
Apr
2015

Auditor Settles Allegations Regarding Approval of Financial Statements by Lehman


The New York State Office of the Attorney General (OAG) has announced that Ernst & Young (EY) has agreed to pay US$10 million to settle allegations regarding the auditing firm's "involvement in a financial statement fraud at the now-defunct investment bank ... Lehman Brothers". Specifically, the OAG alleges that EY's treatment of certain sales, made by Lehman Brothers under the condition of quick repurchase by Lehman Brothers, as being simple sales "enabled [Lehman Brothers] to temporarily remove tens of billions of dollars of securities from its balance sheet without requiring [Lehman Brothers] to disclose the ... transactions as financings on its financial statements". The OAG states that Lehman Brothers is alleged to have "used the funds derived from the transactions to pay down billions of dollars of liabilities". According to the OAG, the settlement sum will be "distributed as restitution to investors in [Lehman Brothers] securities".


OAG's media release (15 April 2015)
(Source: OAG)

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