A recent report has accused the Lehman Brothers' Auditor Ernst & Young of violating the ethics for years prior to the decline of the Bank.

Ernst & Young is likely to face a lawsuit as the report alleges that the Bank was involved in tentatively removing the records of around $50 billion of debt from the balance sheet, without the knowledge of the regulators. This practice is termed as Repo 105.

Others facing the brunt of the court are Dick Fuld, the former Chairman and Chief Executive of Lehman and some of his colleagues.

Lehman has been practicing Repo105 since 2001, but its use was apparent in the last two years of Lehman's collapsing. Immediately before declaring the bankruptcy, the bank officials had reportedly transferred an amount of $50.38 billion under the Repo 105 practice, thereby depicting a fall in its leverage from 13.9 per cent to 12.1 per cent.

"Ernst & Young, the firm's outside auditor, was professionally negligent in allowing those Repo 105 reports to go unchallenged", said Anton Valukas, Author of the report.

Mr. Valukas was appointed by Judge James Peck for the compilation of the report, last year.

Its documentation involved joint efforts of 70 attorneys, conducting 250 interviews. It contains 5 million documents and 26 million hard copies of the emails of the company.

The report came at a cost of $38 million.