San Mateo County is part of a $6.5 million settlement with Lehman Brothers auditors Ernst & Young. Tuesday’s announcement marks the end of legal efforts to recoup government losses from the 2008 Lehman bankruptcy.
Lehman’s failure spelled a $155 million loss to the county’s Investment Pool that held money belonging to the county, school districts, special districts, and other public agencies in more than 1,050 accounts. The county’s Investment Pool ultimately recovered more than $71 million — or 46 percent of losses — through bankruptcy proceedings and litigation against Lehman Brothers’ directors and officers and Lehman’s auditors, Ernst & Young.
According to a San Mateo County release, the local approach served as a template for other jurisdictions seeking redress. Unlike bankruptcy proceedings, the county’s litigation targeted the personal assets of specific executives including former CEO Richard Fuld. The litigation sought to hold them responsible for the firm’s financial failure.
The suits claimed Lehman executives knowingly misled investors leading up to the Sept. 15, 2008, collapse and used accounting gimmicks to hide the company’s true financial condition.
— from staff reports