Auditors Face Fraud Charge (NY Set to Allege Ernst & Young Stood By as Lehman Cooked Its Books)

[maddezmom]

Source: WSJ

New York prosecutors are poised to file civil fraud charges against Ernst & Young for its alleged role in the collapse of Lehman Brothers, saying the Big Four accounting firm stood by while the investment bank misled investors about its financial health, people familiar with the matter said.

State Attorney General Andrew Cuomo is close to filing the case, which would mark the first time a major accounting firm was targeted for its role in the financial crisis. The suit stems from transactions Lehman allegedly carried out to make its risk appear lower than it actually was.

Lehman Brothers was long one of Ernst & Young's biggest clients, and the accounting firm earned approximately $100 million in fees for its auditing work from 2001 through 2008, say people familiar with the matter.

The suit, led by Mr. Cuomo, New York's governor-elect, could come as early as this week. It is part of a broader investigation into whether some banks misled investors by removing debt from their balance sheets before they reported their financial results to mask their true levels of risk-taking, a person familiar with the case said. The state may seek to impose fines and other penalties.



Read more: http://online.wsj.com/article/SB10001424052748704138604576029991727769366.html

[SoCalDem]

1. Just like the auditors who stood by while Enron imploded

:grr:

are we really surprised at anything anymore?

[Demeter]

2. It would seem that fraud, aided and abetted by "accountants" is the American business model

and has been for some time...since post-vietnam, perhaps?

[Botany]

3. For $500 and control of the board Alex, who is the new Governor of Ohio?

That would be John Kasich. Who after leaving congress where he worked to
weaken the laws governing Wall Street and the banking industry went to work
for Lehman Brothers and as an executive at Lehman Brothers John Kasich got the
republican administration of the State of Ohio to invest $480 million into
"junk securities" from Lehman Brothers. So when Lehman Brothers went belly
up the money of the Ohio Government workers retirement fund went bye - bye.

Kasich walked w/ a huge commission check from Lehman Brothers but refused
to say how much it was for and that he really didn't do that much work for
Lehman Brothers anyway because he was spending that much time in N.Y.C..

[DallasNE]

4. Conflict Of Interest Issue

The very structure of Capitalism creates a conflict of interest. In theory the auditors work for the stockholders but in practice they work for the CEO of the corporation. The other problem is the regulatory body that determines GAAP rules whereby creative accounting runs amok. How GAAP rules allow for off-book transactions just boggles the mind. And to think, this has all taken place before Citizens United.

[sirthomas66]

5. All these big accounting firms are as crooked as a dog's hind

leg. When I graduated college with a degree in accounting, I interviewed with Ernst & Young, but never got an offer. I felt bad, but as the years drifted by and I learned more about the big eight firms, as the larger ones were known then, and their crooked dealings, their acts of omissions, their purposely negligent audits, I realized how blessed I was for not getting that offer. Ernst & Young makes Arthur Anderson look like Snow White.

[underpants]

6. Good. Finally.