The ultimate target of Mario Cuomo’s lawsuit against Ernst & Young may be Lehman’s former bosses
One possible outcome is a settlement in which E&Y agrees to co-operate with the prosecutors in cases they may bring against Lehman’s former executives. If so, the fines and sanctions suffered by the auditing firm and its partners may be stiff but not ruinous. After all, no one wants to cause the fall of another big accounting firm. In 2002 Arthur Andersen was found criminally liable for its shredding of documents and other actions linked to its audits of Enron, a collapsed energy giant. Though Andersen’s conviction was later overturned, the firm was already gone. With just four big accounting firms remaining, and none of the next tier big enough to take up the slack, the corporate world cannot easily handle another accounting-firm failure. This is another reason to suspect that the authorities’ real intent is not a credibility-busting hammer blow against E&Y, but perhaps one against Lehman executives instead.