Ernst & Young has agreed to pay $99 million to resolve claims that it encouraged securities fraud by Lehman Brothers Holdings Inc., bringing an end to multidistrict litigation over the investment bank’s securities offerings. Attorneys for Lehman investors detailed the proposed settlement in an Oct. 9 letter to Southern District Judge Lewis Kaplan in Manhattan, who is overseeing the Lehman MDL. Kaplan, who certified a class of investors suing Ernst & Young in January, still needs to approve the deal.
The auditing firm was the last remaining defendant in In re Lehman Brothers Equity/Debt Securities Litigation, 08 Civ. 5523, a case dating back to the investment bank’s collapse in September 2008. Plaintiffs lawyers at Bernstein Litowitz Berger & Grossmann and Kessler Topaz Meltzer & Check claimed Lehman, with the assistance of its auditor, hid its financial woes through a now-infamous accounting practice known as “Repo 105″ that allegedly allowed the bank to understate its leverage.
