Ernst & Young's (EY) US arm has agreed to pay $99m (£60m) to former Lehman Brothers investors who accused the auditor of helping Lehman misstate its financial records before the investment bank's collapse triggered a financial crisis in 2008.

A spokeswoman for EY's New York-based firm said the firm chose to settle so as to put the matter behind it. In a statement, Amy Call Well said the firm denied all liability.

'Lehman's audited financial statements clearly portrayed Lehman as what it was - a highly leveraged entity operating in a risky and volatile industry. Lehman's bankruptcy was not caused by any accounting issues,' Bloomberg reported.

The settlement agreement was disclosed in a federal Manhattan court and signals the end of a massive class action against Lehman's former directors, as well as several other financial institutions.

Lehman - which filed for bankruptcy on September 15, 2008 - was accused of using the highly criticised 'Repo 105' accounting practice to disguise its level of indebtedness in order to make itself appear more financially solvent.

Institutional investors including the Oklahoma Firefighters Pension and Retirement System and the Alameda County Employees Retirement Association challenged the firm's financial statements leading up to the filing, Ernst & Young's opinions about them and whether the bank and its auditor misrepresented or omitted material facts about Lehman's financial condition, artificially inflating the value of its securities, according to papers presented in court.

The settlement follows more than three years litigation which included more than 50 depositions and the review of 26m pages of documents, according to the law firm representing the investors.

Ernst & Young was the last defendant still involved in the case. Bank of America, Morgan Stanley and more than 30 other underwriters of Lehman debt reached a $417m (£254m) settlement in December 2011, while Lehman's former officers, including ex-chief executive Richard Fuld, settled for $90m (£54m).