Ernst & Young fined $10m over Lehman audits

Ernst & Young (EY) has paid $10m to settle claims it was negligent in it duty as auditor when it failed to raise the alarm when Lehman Brothers was heading towards collapse.

The settlement marks the end of a four-year legal fight, and is the first successful action by a law enforcement authority in connection with Lehman's bankruptcy, the Teleraph said, quoting the New York attorney general said. Central to the investigation was Lehman's use of Repo 105, an accounting device within the firm that allowed it to temporaily sell securities to shift risk off its balance sheet. The transactions lasted no longer than a few days, enabling Lehman to remove tens of billions of dollars from its balance sheet without triggering a reporting requirement. EY failed t...