September 25, 2021

EY Still Planning to Settle With Lehman Investors, Also Still in Denial

Back in October, it was reported that EY planned to settle with Lehman Bros investors, subject to court approval (EY's denial notwithstanding):

Ernst & Young LLP has agreed to pay $99 million to settle investor class-action allegations that it turned a blind eye when its audit client Lehman Brothers Holdings Inc. misled investors before the investment bank's 2008 collapse. The investors and Ernst "have reached an agreement in principle" to settle the litigation, the accounting firm and plaintiffs' attorneys both said. The two sides are in the process of drafting a formal settlement agreement, plaintiffs' attorneys said in a letter filed Wednesday in U.S. District Court in Manhattan. The settlement, which was reported this week by legal publications, will be subject to court approval.

As of last Friday, the deal is still on and still needs court approval, the only difference being an actual court filing exists versus the lawyerly pinky swear in place previously. As for an actual admission of guilt from EY, don't bet on it:

Ernst & Young LLP agreed to pay investors $99 million to settle litigation over its auditing of the bankrupt Lehman Brothers Holdings Inc., according to a filing in federal court in Manhattan.

The accord, disclosed by plaintiffs’ lawyers in a filing yesterday in federal court in Manhattan, would resolve claims of investors who bought certain securities issued by the firm from June 12, 2007, to Sept. 15, 2008, the date Lehman filed for bankruptcy, according to the filing. It requires the approval of U.S. District Judge Lewis A. Kaplan.

Though EY previously denied "all liability" in this matter and "chose to settle this claim to put this matter behind" them, it sounds like they're not only still in denial but a little bitter at that:

“Lehman’s audited financial statements clearly portrayed Lehman as what it was — a highly leveraged entity operating in a risky and volatile industry,” [EY spokesperson Amy Call Well] said in an email to Bloomberg. “Lehman’s bankruptcy was not caused by any accounting issues.”

Amy Call Well? Are you guys kidding me?! That can't be real.

Anyhoo, don't hold your breath for anything in this case, really, least of all an admission of guilt from EY.

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