Since the 2008 bankruptcy, there have been no prosecutions of the major executives, even though they intentionally manipulated their quarterly investment reports and financial records so that they did not reflect the real financial condition of the company. Both the president of Lehman Brothers, Richard S. Fuld, Jr., and their Ernst and Young auditors were considered culpable by financial examiners because Mr. Fuld oversaw the manipulation of the financial records and the auditors did not question the accounting practices of the company. This is despite the fact that both the company president and the auditors received written objections from Lehman Brother's chief accountant who was concerned about the misleading financial picture that was being painted.
According to the court appointed financial examiner, Anton Valukas, Lehman Brothers was using accounting gimmicks at the end of every quarter to make their finances look better that they really were. The accounting tricks were called REPO 105, a system they devised in which they created repurchase agreements that would temporarily removed some obligations from the company's balance sheet so it looked as if they were better off than they really were. In November 2007, their chief accountant refused to sign off on the accounting procedures being used by Lehman Brothers. When he catalogued his concerns in writing, he ended up being fired.
When Lehman's case was settled, there were claims against it for approximately $370 billion. Unfortunately, most of the investors had to settle for about 20 cents on the dollar.
Although Anton Valukas, the court appointed financial examiner, published his report about Lehman Brothers on March 11, 2010, according to a CBS "Sixty Minutes" television interview with him shown on August 19, 2012, no arrests have been made. The SEC declined to discuss the case with the reporters at "Sixty Minutes." According to a "Wall Street Journal" report in March, 2011, the SEC said that they were not pursuing a criminal case against anyone at Lehman Brothers or Ernst and Young at that time because they were not confident that US accounting laws had been broken.
Whether or not laws were broken, there is no question that executives at Lehman Brothers were intentionally lying to investors and to the American public.
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You are reading from the blog: http://lies-and-liars.blogspot.com
Photo of Lehman Brothers headquarters courtesy of: http://en.wikipedia.org/wiki/Lehman_Brothers
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