Bloomberg News

Ex-Lehman Officials Win Dismissal of Some Fraud Claims

July 27, 2011

(Updates with Ernst & Young claims in fifth paragraph.)

July 27 (Bloomberg) -- Former Lehman Brothers Holdings Inc. officials won the dismissal of some claims in a securities-fraud suit brought by buyers of more than $31 billion of the defunct investment firm’s securities.

U.S. District Judge Lewis Kaplan in New York today granted parts of a motion to throw out claims in the class-action. It names as defendants five former top Lehman officers, nine former directors, Lehman’s outside auditor Ernst & Young LLP and 51 underwriters of Lehman securities.

The plaintiffs -- a group of pension funds, companies and individuals -- claimed Lehman’s financial statements contained misstatements and omissions about the firm’s use of “Repo 105” transactions, risk-management policies, liquidity risk, credit risk and the value of real estate held by Lehman.

Lehman, once the world’s fourth-biggest investment bank, filed for bankruptcy protection in September 2008 with assets of $639 billion.

Kaplan also dismissed part of the investors’ claims against Ernst & Young, while allowing the case to go forward against the accounting firm.

The case is In re Lehman Brothers Securities and ERISA Litigation, 09-MD-2017, U.S. District Court, Southern District of New York (Manhattan).

--With assistance from Linda Sandler in New York. Editors: Stephen Farr, Fred Strasser.

To contact the reporter on this story: Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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