Pension Funds Bring Class-Action Against E&Y Over Lehman

(February 7, 2012) — Auditor Ernst & Young faces a class-action lawsuit brought by a California pension fund over its handling of Lehman Brothers’ collapse. 

Alameda County Employees’ Retirement Association has asked for the class-action status in the lawsuit involving a group of investors who lost money on Lehman’s collapse, according to Bloomberg. In a February 3 retirement filing, the retirement system alleged that Ernst & Young helped to mislead investors. The scheme alleged that the banking giant made false and misleading statements in regulatory reports about Lehman Brothers’ finances before its 2008 bankruptcy. 

The case is Lehman Brothers Equity/Debt Securities Litigation, 08-cv-05523, U.S. District Court, Southern District of New York (Manhattan).

Lehman Brothers has battled a flurry of investor lawsuits following the financial crisis, with Ernst & Young added as a defendant in 2010. In July of last year, a federal judge in Manhattan District Court ruled that the most serious allegations in the lawsuit of investor losses brought against former Lehman Brothers executives would move forward. Since then, investors have settled with several defendants, including ex-Chief Executive Officer Richard Fuld and other executives.

In August, Lehman Brothers executives revealed plans to pay $90 million to settle the investor lawsuit, brought by shareholders of the failed investment bank. According to a filing in US Bankruptcy Court in Manhattan, investors blamed Lehman officers and directors for losses on company stock and options from June 12, 2007, to September 15, 2008.