Bailout

Whither Ernst & Young and Linklaters?

By Felix Salmon

Blogging’s going to be light-to-nonexistent today, since it’s a travel day for me. But with all the renewed attention on Lehman Brothers (be sure to check out Antony’s piece on the report), it’s worth wondering what might happen to Ernst & Young, in the US, and to Linklaters, in the UK.

Linklaters was the chief enabler of the notorious repo 105 transactions, giving a ludicrous-on-its-face opinion that they were a “true sale”. And this just isn’t credible:

In a statement, Linklaters said Friday that Valukas’ report doesn’t suggest the legal opinion it gave under English law was wrong or improper.

“We have reviewed the opinions and are not aware of any facts or circumstances which would justify any criticism,” the law firm said.

There’s been a lot of noise, of late, about how banking became corrupted when it ceased to be a profession, and that lawyers and doctors somehow remained noble. But these lawyers don’t seem very noble to me.

And if anything E&Y is in even worse shape, given this:

The Examiner concludes that there are colorable claims that Ernst & Young did not meet professional standards either in investigating these allegations and in connection with its audit and review of Lehman?s financial statements.

Enron brought down Arthur Andersen. Will Lehman do the same for E&Y? Or even Linklaters?

Full post as published by Macroprudential on March 12, 2010 (boomark / email).