EY Says Omnicare May Doom Lehman Fraud Claims

Law360, New York (April 3, 2015, 7:27 PM EDT) -- A New York federal judge ordered briefing Thursday on whether the Supreme Court's landmark Omnicare decision bears on fraud suits that accuse accounting firm Ernst & Young LLP of backing transactions that masked fallen brokerage Lehman Brothers Holdings Inc.'s fragile and deteriorating financial state.

U.S. District Judge Lewis A. Kaplan asked for briefing to determine whether the Omnicare ruling, which held that a false opinion doesn't confer liability on an auditor unless it can be shown the auditor knew of its falsity, could entitle EY to summary judgment against plaintiffs who opted out of a previous settlement.

"In all the circumstances,...

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