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Ernst & Young Wants a Showdown

This was worth the wait.

Directly from the firm’s website:

Ernst & Young’s Response to New York Attorney General’s Complaint

New York, 21 December 2010 – We intend to vigorously defend against the civil claims alleged by the New York Attorney General.

There is no factual or legal basis for a claim to be brought against an auditor in this context where the accounting for the underlying transaction is in accordance with the Generally Accepted Accounting Principles (GAAP). Lehman’s audited financial statements clearly portrayed Lehman as a highly leveraged entity operating in a risky and volatile industry.

Lehman’s bankruptcy occurred in the midst of a global financial crisis triggered by dramatic increases in mortgage defaults, associated losses in mortgage and real estate portfolios, and a severe tightening of liquidity. Lehman’s bankruptcy was preceded and followed by other bankruptcies, distressed mergers, restructurings, and government bailouts of all of the other major investment banks, as well as other major financial institutions. In short, Lehman’s bankruptcy was not caused by any accounting issues.

What we have here is a significant expansion of the Martin Act. Although the Martin Act is almost 90 years old, we believe this is the first time that an Attorney General is attempting to use this law to assert claims against an accounting firm, rather than the company that took the alleged actions.

We look forward to presenting the facts in a court of law.

In other words, Andy – get lost; drop dead; suck it. AM Law Daily reports that E&Y has big guns on the case:

Miles Ruthberg, a former global litigation chair at Latham & Watkins, confirmed, via an e-mail to The Am Law Daily, that he’s representing E&Y in the suit along with Latham securities litigation and professional liability cochair Jamie Wine and Kramer Levin Naftalis & Frankel white-collar defense and SEC regulatory cochair Barry Berke. Latham, which has previously represented E&Y, has been handling securities litigation against the accounting firm stemming from Lehman’s failure.

To mark this occasion, we present an appropriate video (BL-inspired):

Where Is Ernst & Young Finding All This Musical Talent?

Look, I understand that these firms want well-rounded individuals but when more and more people start showing talents that outshine their professional services skills, it makes you wonder if the recruiting folks need a talking to. I bring this up because, unbeknownst to us, FORTUNE puts together a Battle of the Corporate Bands every year and this year’s winner is American PI, a 12-member band, 11 of which are E&Y employees. Granted, they won’t be winning Record of the Year any time soon since they’re simply covering I Heard It Through the Grapevine, Southbound, People Get Ready, and Superstition but they did have three members win “best of” awards.

And with this triumph by American PI, E&Y now has rock, show tunes, and hip-hop covered. It’s probably only a matter of time until they manage to poach the PwC pianist.

[via AT]