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Ernst & Young Target of Ex-Lehman Executive Whistleblower

Ex-Lehman Brothers senior vice president Matthew Lee says it didn't take the company long to respond to a letter he sent to its finance chief and other executives in May 2008 detailing his concerns regarding balance sheet improprieties and other financial irregularities going on at the company. He claims the company engaged in whistleblower retaliation by summarily removing him from a meeting and firing him on the spot.

Now Lee is resurfacing again following Lehman's collapse, as investigatory focus centers on the performance of the accounting firm Ernst & Young during its tenure as Lehman's auditor.

"I had a premonition that this day was coming," Lee recently told a newspaper reporter, following the release by a bankruptcy examiner of his findings regarding Ernst & Young's conduct. In his questioning of the accounting firm, the examiner honed in on many of the comments and claims that Lee made to Lehman executives.

The examiner's report noted that Lehman's board of directors' audit committee directed Ernst & Young to identify and discuss all the allegations Lee had made, including his claims concerning balance sheet manipulations. Ernst & Young failed to do that, an omission that the examiner found to be glaring and in bad faith.

"Colorable claims exist that Ernst & Young did not meet professional standards, both in investigating Lee's allegations and in connection with its audit and review of Lehman's financial statements," the report stated.

Investigation of the accounting firm continues, as prosecutors consider criminal charges.

Related Resource: "Lehman Brothers Whistleblower Matthew Lee Again in Spotlight" December 21, 2010

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