accounting rules

Audit Firm Ernst & Young to be Sued for Lehman Brothers Repo 105s

Remember the hearings on Repo 105 debt hiding scams with Lehman Brothers? How Bill Black called the SEC criminally negligent for letting Lehman Brothers move $50 billion dollars in liabilities temporary off their books with an accounting trick, a Repo 105 transaction?

It seems New York Prosecutors are going to sue Ernst & Young over these accounting gimmicks used to temporarily make a firm look more solvent. New York Attorney General Andrew Cuomo is going after the audit firm in civil court.

Prosecutors in New York are set to file civil fraud charges against accounting firm Ernst & Young LLC over the collapse of Lehman Brothers Holdings Inc, the Wall Street Journal said on Monday, citing people familiar with the matter.

The suit, led by Andrew Cuomo, could come as early as this week and might seek to impose fines and other penalties, the paper said.

A spokeswoman for Ernst & Young said the company did not comment on speculation and repeated a previous statement made by the firm about its dealings with Lehman Brothers.

"Throughout our period as the auditor of Lehman, we firmly believe our work met all applicable professional standards, applying the rules that existed at the time," the statement said.

The Wall Street Come Back - Due to SEC Possible Change of Accounting Rules Mark-to-Market

While the pundits threaten and promote Paulson's bail out plan, there are actually other things going on which Wall Street seems to like.

"News that the SEC is working with FASB [Financial Accounting Standards Board] on 'fair value' accounting rules that could delay implementation of the onerous mark-to-market provision are giving stocks fresh legs higher," according to analysts at Action Economics

From CBS Market Watch.

SEC and FASB in negotiations: