E&Y now faces an investigation on UK shores after the US examiner, Anton Valukas said in his report to the US bankruptcy court that E&Y could face legal claims for ‘professional malpractice’ arising from what he called ‘negligent’ actions.

The Accountancy and Actuarial Disciplinary Board, which regulates the accountancy profession in the UK, has launched its own investigation into E&Y’s accounting treatment of  “Repo 105s” and “Repo 108s”, the controversial transactions which Lehman regularly used in its quarter-end balance sheets.

According to the FT, E&Y are maintaining their previous stance: “Ernst & Young’s audit opinion stated that Lehman’s financial statements for that year were fairly presented in accordance with the relevant accounting standards, and we remain of that view.”