Auditing firm Ernst & Young will pay investors $10 million to settle a lawsuit over the firm's alleged involvement in fraud committed by the now-closed investment bank Lehman Brothers Holdings, New York Attorney General Eric Schneiderman said on Wednesday.
The money will be given to Lehman securities investors as restitution along with the $99 million Ernst & Young has agreed to pay in a private federal class-action lawsuit. Schneiderman said the settlement was the first resolution to a lawsuit brought against an auditor under the state's securities laws.
No other lawsuits have been brought by other law enforcement agencies in regards to the Lehman Brothers collapse in 2008, Schneiderman said.
He compared an auditor's responsibility to hold companies accountable during its audits to the state's obligation to hold Ernst & Young accountable for violating New York State law.
“The basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public,” Schneiderman said. “If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy and our country.”