Former Lehman Brothers Holdings Inc executives, directors, auditors and underwriters lost their bid on Wednesday to dismiss an investor lawsuit seeking to hold them responsible for losses tied to the investment bank's collapse.

In a 106-page decision, U.S. District Judge Lewis Kaplan in Manhattan said the plaintiffs, which include retirement and pension funds around the world, companies and individuals, sufficiently alleged that Lehman materially misled them about its accounting and its ability to manage risk ahead of its September 15, 2008, bankruptcy.

Kaplan said it is entirely plausible that the misleading picture Lehman portrayed about its financial condition inflated its stock price and resulted in investor losses.

The decision, in a case that began three months before Lehman went bankrupt, comes amid other investigations into Lehman's collapse.

In December 2010, the New York attorney general's office sued Lehman's accounting firm Ernst & Young, saying it stood by as Lehman painted a false picture of financial health.

Among the other defendants in the investor lawsuit are former Lehman Chief Executive Richard Fuld, former directors including one-time International Business Machines Corp Chief Executive John Akers and theater producer Roger Berlind, and more than 50 bank underwriters.

Lawyers for Fuld, the former directors, most of the underwriters and the investors did not immediately return requests for comments. Ernst & Young did not have an immediate comment. The office of New York Attorney General Eric Schneiderman was also not immediately available to comment. Lehman's bankruptcy estate is not named in the lawsuit.

Lehman filed for bankruptcy with $639 billion of assets, and its collapse was a principal trigger of the 2008 global financial crisis. Barclays Plc took over a large part of its investment banking business. No top Lehman officials have faced U.S. prosecutions over the bankruptcy.

REPO 105

At the center of these case is Lehman's use of so-called Repo 105 transactions, exposed in a March 2010 report by bankruptcy examiner Anton Valukas.

The examiner found that these transactions allowed Lehman to obscure its financial leverage ratios and health.

In his opinion, Kaplan said the investors failed to show that these transactions materially affected Lehman's liquidity, or that there was a material misstatement around their use.

But he said the investors sufficiently alleged that some defendants knew the transactions had painted a misleading picture, and that Ernst & Young made a false statement in claiming ignorance of the impact of the transactions.

He wrote that the complaint adequately alleged that Lehman overstated its financial strength, understated its leverage, and understated its exposure to risky Alt-A mortgages and commercial real estate assets.

Many of the investors who sued said they had bought some of the more than $31 billion of equity and debt that Lehman had issued under a 2006 shelf registration statement.

(Reporting by Jonathan Stempel, Additional reporting by Dena Aubin; editing by Maureen Bavdek and Gerald E. McCormick)

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