New York based-Ernst & Young (FY12 net revenue of $8.2 billion) has agreed to pay $99 million to settle investor class-action allegations that it did not act when its audit client, Lehman Brothers Holdings, misled investors prior to its 2008 collapse, Reuters reported.
The agreement must be approved by the courts. Lehman is accused of using the now-infamous “Repo 105″ accounting practice to understate its leverage to make itself appear more solvent. “The settling parties are currently drafting a detailed stipulation of settlement and anticipate” asking the court for permission to notify class members of the deal in about 30 days, the investors said in court papers. Ernst & Young denied all liability. “Lehman’s audited financial statements clearly portrayed Lehman as what it was – a highly leveraged entity operating in a risky and volatile industry; and Lehman’s bankruptcy was not caused by any accounting issues,” Ernst & Young said in a statement.