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Lehman Brothers’ chiefs concealed losses with accounting ‘gimmick’ days before $700billion collapse

UK Daily Mail [1]
March 12, 2010

Lehman Brothers used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008 with more than $700 billion (£461 billion) in assets, an official investigation has found.

Some of Lehman’s management’s decisions can be questioned and the firm’s valuation procedures for its assets may have been wanting – but those responsible were not liable for the firm’s collapse, Anton Valukas found.

However, Lehman could have claims against former chief executive Dick Fuld and chief financial officers Chris O’Meara, Erin Callan and Ian Lowitt for negligence or breach of fiduciary duty, he added.

The revelations came in a 2,200-page report into who could be blamed for the firm’s collapse in 2008, which deepened the global financial crisis.

The examiner said there was also sufficient evidence to support a possible claim that the firm’s auditor, Ernst & Young, had been ‘negligent’ and that Lehman could pursue claims against the firm for ‘professional malpractice’.

Read more: http://www.dailymail.co.uk/news/article-1257350/Lehman-Brothers-bosses-manipulated-balance-sheet-accounting-tricks-scathing-report-finds.html#ixzz0hxlNWEAM [2]