US - A group of institutional investors, shareholders in Lehman Brothers, have filed an amended complaint which names Lehman's former auditor Ernst & Young as an additional defendant.
The shareholders accused the accounting firm of approving financial statements based on "bogus transactions expressly devised to hide the company's deteriorating financial condition".
The updated complaint - which follows a report by Lehman's court-appointed examiner Anton Valukas - claimed Lehman used certain repurchase and resale transactions to improve its balance sheet position.
It added transactions known as Repo 105 and Repo 108 were used to temporarily remove tens of billions of dollars' worth of assets from its balance sheet at the end of financial reporting periods, and that Lehman "executed the repo agreements solely to fraudulently prop up its disclosure statements".
The Lehman shareholder suit was originally filed following losses stemming from the firm's September 15, 2008 bankruptcy filing.
Investors alleged that in the period leading to the bankruptcy, former Lehman officers, including ex-chief executive Richard Fuld, made repeated misstatements about the firm's financial health, including minimizing Lehman's exposure to weakening residential and commercial real estate markets.
The amended complaint is based Valukas's statement that Ernst & Young "knew or should have known" that parts of Lehman's financial statements were false and misleading.
Ernst & Young said in a statement: "We are confident in our ability to successfully defend ourselves against claims arising from our work with Lehman Brothers. Throughout our period as the auditor of Lehman, we firmly believe our work met all applicable professional standards, applying the rules that existed at the time.
"Lehman's bankruptcy was the result of a series of unprecedented adverse events in the financial markets. As the Bankruptcy Examiner has acknowledged, Lehman's bankruptcy was caused by a collapse in its liquidity, which in turn was caused by declining asset values and loss of market confidence in Lehman. It was not caused by any accounting issues."
The People's Pension, Atlas Master Trust and The Cheviot Trust have been granted authorisation from The Pensions Regulator (TPR), taking the total number of authorised master trusts to 18.
Pension schemes have been warned they may now face a more challenging legal test if they wish to fix drafting errors.
The Greene King Pension Scheme has appointed XPS Pensions as its actuarial and investment adviser following a competitive tender process.
Professional Pensions has compiled a list charting the progress of master trust authorisation. View our list in full here...