Editing Creative accounting (section)

=== Lehman Brothers' Repo 105 scheme ===
{{Main articles|Repo 105}}
[[Lehman Brothers]] utilized [[Repurchase agreement|repurchase agreements]] to bolster profitability reports with their [[Repo 105]] scheme under the watch of the accounting firm [[Ernst & Young]]. The scheme consisted of mis-reporting a repurchase agreement (a promise to re-buy a liability or asset after selling it) as a sale, and timing it exactly in a way that half of the transaction was completed before a profitability reporting deadline, half after—hence bolstering profitability numbers on paper. Public prosecutors in New York filed suit against EY for allowing the "accounting fraud involving the surreptitious removal of tens of billions of dollars of fixed income securities from Lehman's balance sheet in order to deceive the public about Lehman's true liquidity condition".<ref>{{Cite web|url=https://ag.ny.gov/press-release/2010/attorney-general-cuomo-sues-ernst-young-assisting-lehman-brothers-financial-fraud|title=Attorney General Cuomo Sues Ernst & Young For Assisting Lehman Brothers In Financial Fraud {{!}} New York State Attorney General|website=ag.ny.gov|date=21 December 2010 |access-date=2019-09-23}}</ref>

[[Enron]] had done exactly the same about 10 years earlier; in their case, [[Merrill Lynch]] aided Enron in bolstering profitability close to earnings periods by willfully entering repurchase agreements to [[Merrill Lynch|buy Nigerian barges from Enron]], only for Enron to buy them back a few months later. The [[U.S. Securities and Exchange Commission]] (SEC) filed charges and convicted multiple Merrill Lynch executives of aiding the fraud.<ref>{{Cite web|url=https://www.sec.gov/news/press/2003-32.htm|title=SEC Charges Merrill Lynch, Four Merrill Lynch Executives with Aiding and Abetting Enron Accounting Fraud|website=www.sec.gov|access-date=2019-09-28}}</ref>