A one-year probe into the collapse of Lehman Brothers found “credible evidence” that top executives, including the former chief Dick Fuld, approved misleading financial statements and used an “accounting gimmick” to flatter results.
A one-year probe into the collapse of Lehman Brothers found “credible evidence” that top executives, including the former chief Dick Fuld, approved misleading financial statements and used an “accounting gimmick” to flatter results.
The long-awaited report by the court-appointed examiner Anton Valukas also said that there was enough evidence to claim that Ernst & Young, Lehman’s auditors, failed to “question and challenge improper or inadequate disclosures” in the firm’s results.
The 2,200-page report found some evidence that JPMorgan Chase and Citigroup might have contributed to Lehman’s slide into bankruptcy in September 2008 by demanding collateral from the struggling bank in the run-up to its failure.
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Mr Valukas’ report could pave the way for legal action by the Lehman estate, which is charged with recovering as much money as possible for its creditors, and class action lawsuits by investors who bought Lehman’s securities before its collapse.
The hard-hitting report found evidence that Mr Fuld and Christopher O’Meara, Erin Callan and Ian Lowitt, who were chief financial officers of Lehman during its last days, failed to disclose the use of an accounting device that enabled the bank to hold $50bn off its balance sheet in both the first and second quarter of 2008.
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