E&Y is wrong on every count!

Ernst & Young LLP, bankrupt Lehman Brothers Holdings Inc.’s former auditor, should “disgorge” $125 million in fees earned in an alleged fraud involving so- called Repo 105 transactions that concealed tens of billions of dollars in debt, the New York attorney general said.

Attorney General Eric Schneiderman asked a judge today to let him pursue the suit after the auditing firm tried to get it dismissed. The state is limited by law from recovering the fees for itself or for Lehman’s former shareholders, Ernst & Young said.

“E&Y is wrong on every count,” Schneiderman said in a court filing in U.S. District Court in Manhattan. “It is well- settled that the state can, and frequently does, obtain disgorgement of ill-gotten gains under public enforcement statutes.”