http://www.economist.com/blogs/dailychart/2010/12/charts_2010

http://www.economist.com/blogs/dailychart/2010/12/charts_2010.

Going for the auditors

Ernst & Young sued over Lehman
The ultimate target of the lawsuit may be Lehman’s former bosses

Dec 29th 2010 | NEW YORK | from PRINT EDITION : The Economist

WAS the collapse of Lehman Brothers in 2008 aided by a fraudulent cover-up of balance-sheet shenanigans? Andrew Cuomo, New York’s outgoing attorney-general and incoming state governor, thinks so, and has filed suit against Ernst & Young, Lehman’s auditors.

Mr Cuomo alleges that E&Y committed fraud by signing off on an accounting maneuver used by Lehman, known as Repo 105. Under this scheme, towards the end of each quarter Lehman temporarily swapped some of its assets for cash with another bank or investor, but booked this as if it were a permanent sale of the assets. By doing this, it and the other banks that used this maneuver in the run-up to the credit crunch made themselves look less indebted in their quarterly results.