NY attorney general settles suit for $10M against Ernst & Young over Lehman Brothers audit

Associated Press

New York's attorney general has settled a lawsuit against Ernst & Young over auditing at the now-defunct investment bank Lehman Brothers for $10 million.

The attorney general's office says that will help pay restitution to investors in Lehman securities, along with $99 million Ernst & Young is paying to settle a federal class action.

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Authorities say the bank transferred securities to overseas entities in return for cash, with an understanding it would quickly repurchase them. But it showed them as sales, used the money to pay down liabilities and temporarily presented misleading impressions of its financial health.

The lawsuit said Ernst & Young approved Lehman's accounting and issued unqualified opinions certifying financial statements.

Ernst & Young says it's pleased to put the matter behind it "with no findings of wrongdoing."