Lehman Bankruptcy: Officials Manipulated Balance Sheets, JPMorgan And Citi Contributed To Collapse

[WillyT]

Lehman Bankruptcy Report: Top Officials Manipulated Balance Sheets, JPMorgan And Citi Contributed To Collapse
Shahien Nasiripour - HuffingtonPost
First Posted: 03-11-10 04:47 PM | Updated: 03-11-10 07:39 PM

<snip>

The examiner in charge of investigating the bankruptcy of venerable Wall Street investment house Lehman Brothers, the most expensive bankruptcy in U.S. history, said in a report publicly released Thursday that senior officials failed to disclose key practices, opening them up to legal claims, and that JPMorgan Chase and Citigroup contributed to the firm's collapse. In addition, the report concludes that the firm's auditor, Ernst & Young, failed to meet "professional standards."

The exhaustive report was unsealed today by Judge James M. Peck, who said the report reads "like a best-seller."

The examiner, Anton Valukas, also found that parties have claims to pursue against JPMorgan Chase and Citibank in connection with their behavior regarding the modification of agreements with Lehman and their increasing collateral demands in Lehman's final days. These demands had a "direct impact" on Lehman's diminishing liquidity -- its cash on hand -- which was a prime reason behind the firm's demise.

"Citi is reviewing the report, which is over 2,000 pages long, but notes that, based on its preliminary review, the examiner has not identified any wrongdoing on Citi's part -- or anything that would suggest that Citigroup helped cause Lehman's collapse," said Danielle Romero-Apsilos, director of corporate affairs for Citi Institutional Clients Group.

The examiner's report notes:

The business decisions that brought Lehman to its crisis of confidence may have been in error but were largely within the business judgment rule.The business decisions that brought Lehman to its crisis of confidence may have been in error but were largely within the business judgment rule.


But the decision not to disclose the effects of those judgments does give rise to colorable claims against the senior officers who oversaw and certified misleading financial statements -- Lehman's CEO Richard S. Fuld, Jr., and its CFOs Christopher O'Meara, Erin M. Callan and Ian T. Lowitt.

There are colorable claims against Lehman's external auditor Ernst & Young for, among other things, its failure to question and challenge improper or inadequate disclosures in those financial statements.

The examiner defines a "colorable claim" as those for which the examiner "found that there is sufficient credible evidence to support a finding by a trier of fact." In other words, plaintiffs can start lining up.

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Much More: http://www.huffingtonpost.com/2010/03/11/lehman-bankruptcy-report_n_495668.html

:wow:

:kick:

[NRaleighLiberal]

1. But of course, we don't need to regulate. People/companies do the right thing.

:sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm:

[WillyT]

2. G'Night Kick !!!

:kick:

[flvegan]

3. ...and nothing will ever come of it. Suck it up, citizens.

[slipslidingaway]

4. NY Fed Under Geithner Implicated in Lehman Accounting Fraud

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7899738&mesg_id=7899738

"Well, it is folks, as a newly-released examiner’s report by Anton Valukas in connection with the Lehman bankruptcy makes clear. The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.

We need to demand an immediate release of the e-mails, phone records, and meeting notes from the NY Fed and key Lehman principals regarding the NY Fed’s review of Lehman’s solvency. If, as things appear now, Lehman was allowed by the Fed’s inaction to remain in business, when the Fed should have insisted on a wind-down (and the failed Barclay’s said this was not infeasible: even an orderly bankruptcy would have been preferrable, as Harvey Miller, who handled the Lehman BK filing has made clear; a good bank/bad bank structure, with a Fed backstop of the bad bank, would have been an option if the Fed’s justification for inaction was systemic risk), the NY Fed at a minimum helped perpetuate a fraud on investors and counterparties."

[HCE SuiGeneris]

5. How many crooks will be allowed to play political figureheads?

I've lost track. :shrug: