
In the client letter, which was leaked to Francine McKenna’s re: The Auditors blog, E&Y stated that it is “confident we will prevail should any of the potential claims identified against us be pursued.” It further stated that “Lehman’s bankruptcy was the result of a series of unprecedented adverse events in the financial markets. [Its] bankruptcy was caused by a collapse in its liquidity, which was, in turn, caused by declining asset values and loss of market confidence in Lehman. It was not caused by accounting issues or disclosure issues.”
E&Y also stated in the letter that “[w]hat has not been reported in the media is that the Examiner did not challenge Lehman’s accounting for its Repo 105 transactions.”