| NEW YORK
NEW YORK Oct 18 Former Lehman Brothers
investors have reached a $99 million settlement with Ernst &
Young, the defunct financial firm's erstwhile auditor,
over allegations it helped Lehman misstate its financial
In a letter filed this week in federal court in Manhattan,
lawyers for the plaintiffs (the investors) in the case said they
had reached a preliminary deal on which they will seek court
The agreement, under which Ernst & Young would pay the
investors $99 million, signals the end of a massive class action
against Lehman's former directors, as well as several other
financial institutions, over the infamous "Repo 105" accounting
practice Lehman is accused of using to misleadingly understate
The plaintiffs asked the court to suspend the case while the
sides draft a settlement agreement.
"The settling parties are currently drafting a detailed
stipulation of settlement and anticipate" asking the court for
permission to notify class members of the deal in "approximately
30 days," the plaintiffs said in the letter.
Lawyers for Ernst & Young did not immediately respond to a
request for comment.
Ernst & Young is the last defendant still involved in the
case. Bank of America Corp, Morgan Stanley and
more than 30 other underwriters of Lehman debt reached a $417
million settlement in December 2011, while Lehman's former
officers, including ex-Chief Executive Richard Fuld, settled for
The case goes back to 2008, when Lehman's historic collapse
served as a key catalyst to the global financial crisis.
Investors filed the lawsuit that year, accusing Lehman
directors of painting a misleading picture of Lehman's health in
financial statements and securities offerings. Ernst & Young and
the underwriters contributed to the fraud by failing to
investigate and ensure the truthfulness of the statements, the
Lehman ended its three-year Chapter 11 in 2011 with a
liquidation plan slated to repay creditors about $65 billion, or
an average of about 21 cents on the dollar for allowed claims.
The case is In re Lehman Brothers Equity/Debt Securities
Litigation, U.S. District Court, Southern District of New York,
Lehman's bankruptcy is In re Lehman Brothers Holdings Inc,
U.S. Bankruptcy Court, Southern District of New York, No.