Are Lehman's Auditors Above The Law?

Dees Illustration

Jeff McCord

Activist Post 

Many wonder why the Securities and Exchange Commission and U.S. Department of Justice are seemingly unable to prosecute Lehman Brothers and its auditor Ernst & Young for the massive over-valuations of the investment bank’s sub-prime mortgage-backed “assets” and other misleading (and, possibly, fraudulent) information published in financial statements in the years and quarters leading to the systemic financial meltdown that Lehman’s own bankruptcy helped fuel.  Are Lehman’s auditors above the law?  Regrettably, for a number of reasons, auditors are becoming increasingly immune from challenge by prosecutors, regulators and investors. 

The first reason is that money talks in Washington.  Although most citizens know of the overwhelming donations to federal political candidates by banks and other financial services firms, it may surprise some that accountants are also a very generous source of funding for both Republican and Democratic candidates.  In the election cycle of 2009-2010, alone, the “big four” accounting firms and their association contributed more than $8 million to federal candidates, according to the Center for Responsive Politics.  In the same period, fraud defendant Ernst & Young contributed in excess of $1.6 million to politicians.