Ernst & Young and the investment firm managed by former AIG CEO Maurice “Hank” Greenberg have settled the firm’s lawsuit accusing Ernst & Young of helping Lehman Brothers hide tens of billions of dollars in fixed-income securities. The parties had agreed in principle to settle the lawsuit filed in 2011 by Starr International USA Investments LC. The parties asked the court to stay the case, saying they expect to finalize the settlement very soon. The case was slated to go before a jury in April.
Starr’s initial lawsuit claimed that Ernst & Young handed the collapsed investment bank clean audits year after year even though it knew Lehman used allegedly fraudulent transactions to make its risks appear lower than they actually were. The company said had the accounting firm properly evaluated Lehman, Starr never would have purchased $200 million worth of the bank’s securities, the company said.
Starr International is represented by Banks Brown, Allison Elizabeth Fleischer, Andrew Bennett Kratenstein, Audrey Lu, John J. Calandra and Michael Robert Huttenlocher, Jr., of McDermott, Will & Emery LLP. The case is in the U.S. District Court for the Southern District of New York.