Ernst And Young Respond To Criticisms Over Lehman Brothers Bankruptcy

Thu, 25 Mar 2010

Accountancy firm Ernst and Young has hit back at claims it played a role in the collapse of investment bank Lehman Brothers in 2008.

A 2,200-page accounting practices report released earlier this month claimed the Big Four firm used a number of techniques - including the controversial Repo 105 - to generate cash and boost the presentation of Lehman Brothers’ balance sheet prior to the publication of its accounts .

The report’s author, US lawyer and examiner of the bank’s collapse, Anton Valukas, said E&Y helped the bank conceal some $50bn (£33bn) of loans from its balance sheet.

However, several audit partners have come to the firm’s defence, arguing the fall of Lehman Brothers was not due to neglect on its part but the result of "a series of unprecedented adverse events in the financial markets ".

In a letter to key clients, the partners said the bank suffered due to "a loss of liquidity, caused by declining asset values and a loss of confidence in the institution".

They added: "Ernst and Young is confident we will prevail should any of the potential claims identified against us be pursued."
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