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Ernst & Young Settles Lehman Investor Suit for $99 Mln
Ernst & Young LLP agreed to pay investors $99 million to settle litigation over its auditing of the bankrupt Lehman Brothers Holdings Inc., according to a filing in federal court in Manhattan.
The accord, disclosed by plaintiffs’ lawyers in a filing yesterday in federal court in Manhattan, would resolve claims of investors who bought certain securities issued by the firm from June 12, 2007, to Sept. 15, 2008, the date Lehman filed for bankruptcy, according to the filing. It requires the approval of U.S. District Judge Lewis A. Kaplan.
The proposed settlement is the result of more than three years of hard-fought litigation,” that included more than 50 depositions and the review of 26 million pages of documents, lawyers for the investors said in the filing.
Once the fourth-largest U.S. investment bank, New York-based Lehman filed for bankruptcy after losing 94 percent of its market value in the subprime mortgage crisis. Listing more than $613 billion in debt, it was the biggest bankruptcy filing in history.
Institutional investors including the Oklahoma Firefighters Pension and Retirement System and the Alameda County Employees Retirement Association challenged the firm’s financial statements leading up to the filing, Ernst & Young’s opinions about them and whether the bank and its auditor misrepresented or omitted material facts about Lehman’s financial condition, artificially inflating the value of its securities, according to yesterday’s filing.
Liability Denied
Ernst & Young settled the claim because it chose to put the matter behind it, Amy Call Well, a spokeswoman for the New York-based firm, said in an e-mail. Ernst & Young denies all liability to the plaintiffs, she said.
“Lehman’s audited financial statements clearly portrayed Lehman as what it was -- a highly leveraged entity operating in a risky and volatile industry,” she said in the e-mail. “Lehman’s bankruptcy was not caused by any accounting issues.”
A 2010 report by attorney Anton Valukas, appointed Lehman’s bankruptcy examiner, said the accounting firm could be accused of “professional malpractice” for its auditing work.
The case is In Re Lehman Brothers Securities and ERISA Litigation, 09-MD-2017, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
http://www.bloomberg.com/news/2013-11-28/ernst-young-settles-lehman-investor-suit-for-99-mln.html
Ernst & Young LLP agreed to pay investors $99 million to settle litigation over its auditing of the bankrupt Lehman Brothers Holdings Inc., according to a filing in federal court in Manhattan.
The accord, disclosed by plaintiffs’ lawyers in a filing yesterday in federal court in Manhattan, would resolve claims of investors who bought certain securities issued by the firm from June 12, 2007, to Sept. 15, 2008, the date Lehman filed for bankruptcy, according to the filing. It requires the approval of U.S. District Judge Lewis A. Kaplan.
The proposed settlement is the result of more than three years of hard-fought litigation,” that included more than 50 depositions and the review of 26 million pages of documents, lawyers for the investors said in the filing.
Once the fourth-largest U.S. investment bank, New York-based Lehman filed for bankruptcy after losing 94 percent of its market value in the subprime mortgage crisis. Listing more than $613 billion in debt, it was the biggest bankruptcy filing in history.
Institutional investors including the Oklahoma Firefighters Pension and Retirement System and the Alameda County Employees Retirement Association challenged the firm’s financial statements leading up to the filing, Ernst & Young’s opinions about them and whether the bank and its auditor misrepresented or omitted material facts about Lehman’s financial condition, artificially inflating the value of its securities, according to yesterday’s filing.
Liability Denied
Ernst & Young settled the claim because it chose to put the matter behind it, Amy Call Well, a spokeswoman for the New York-based firm, said in an e-mail. Ernst & Young denies all liability to the plaintiffs, she said.
“Lehman’s audited financial statements clearly portrayed Lehman as what it was -- a highly leveraged entity operating in a risky and volatile industry,” she said in the e-mail. “Lehman’s bankruptcy was not caused by any accounting issues.”
A 2010 report by attorney Anton Valukas, appointed Lehman’s bankruptcy examiner, said the accounting firm could be accused of “professional malpractice” for its auditing work.
The case is In Re Lehman Brothers Securities and ERISA Litigation, 09-MD-2017, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
http://www.bloomberg.com/news/2013-11-28/ernst-young-settles-lehman-investor-suit-for-99-mln.html
