FRC drops Lehman case against Ernst & Young
The Financial Reporting Council (FRC) has abandoned the case against Ernst & Young over its role as auditor of collapsed US investment bank Lehman Brothers.
Despite various lawsuits and regulatory probes, Gareth Rees QC, FRC’s executive counsel, decided that “no action should be taken against E&Y or any individuals in connection with their conduct in the case.”
A spokesman for E&Y responded to the decision, saying it “confirms our belief that the quality of our audit work met with the appropriate professional standards”
The long-running case centred on the discovery by administrators PwC of a shortfall in the pool of money held on trust for clients, which should have been segregated and safeguarded in accordance with the rules set out in CASS.