E&Y Will Likely Settle: McKenna
NEW YORK (
) -- If New York State Attorney General and Governor-elect Andrew Cuomo does file civil fraud case against
Ernst & Young
for its role in the bankruptcy of
Lehman Brothers
, the accounting firm will likely settle as soon as possible, says Francine McKenna, of accounting blog
Re:The Auditors
.
"They will settle it. They will do everything they can to avoid a trial," McKenna says.
McKenna points out if a settlement is reached quickly, "it will discourage others - regulators and private parties - from pursuing claims
against Ernst & Young," she says
Cuomo's office has been investigating suspected window-dressing transactions at Lehman and other banks. Cuomo's investigation found that
Ernst & Young specifically approved of Lehman's use of Repo 105 transactions , according to published reports.
Ernst & Young earned $100 million in fees for its auditing work at Lehman Brothers, according to published reports.
All The Banks Are Window Dressing>>> >
Any action against the auditing firms is being lead by New York because federal authorities are pursuing a different enforcement path, McKenna says. "I suspect that companies are being careful about disclosures right now," she says. "I think the
Securities and Exchange Commission
and the U.S. Department of Justice are focused on individuals in the Lehman bankruptcy and not the auditors."
--Written by Maria Woehr in New York.
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