The New York Times reports now, an arbitration panel has dealt with the liability of one of those parties, finding no basis for a malpractice claim against Ernst & Young (E&Y), the big accounting firm that audited Lehman’s books.
The panel of three former judges ruled in April that it was Lehman’s management, not E&Y, that was most responsible for setting in motion and maintaining a controversial accounting maneuver that allowed the firm to temporarily move tens of billions of dollars in debt off its balance sheet at the end of every quarter.
The previously unreported ruling could complicate a pending lawsuit the New York attorney general’s office filed against E&Y in 2010 over the collapse of Lehman. The lawsuit accused E&Y of helping Lehman engineer an accounting fraud that made it look less leveraged than it truly was in the months before its collapse in September 2008.
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