Lehman Brothers

Audit Firm Ernst & Young to be Sued for Lehman Brothers Repo 105s

Remember the hearings on Repo 105 debt hiding scams with Lehman Brothers? How Bill Black called the SEC criminally negligent for letting Lehman Brothers move $50 billion dollars in liabilities temporary off their books with an accounting trick, a Repo 105 transaction?

It seems New York Prosecutors are going to sue Ernst & Young over these accounting gimmicks used to temporarily make a firm look more solvent. New York Attorney General Andrew Cuomo is going after the audit firm in civil court.

Prosecutors in New York are set to file civil fraud charges against accounting firm Ernst & Young LLC over the collapse of Lehman Brothers Holdings Inc, the Wall Street Journal said on Monday, citing people familiar with the matter.

The suit, led by Andrew Cuomo, could come as early as this week and might seek to impose fines and other penalties, the paper said.

A spokeswoman for Ernst & Young said the company did not comment on speculation and repeated a previous statement made by the firm about its dealings with Lehman Brothers.

"Throughout our period as the auditor of Lehman, we firmly believe our work met all applicable professional standards, applying the rules that existed at the time," the statement said.

SEC writes letter to ALL Executive Financial Officers Demanding Repo 105 Disclosure

The SEC has written a letter (full letter at Zero Hedge link) demanding to find out if anybody else used repo 105s as a shell game to hid losses.

please tell us whether you have offset securities owned (long positions) with securities sold, but not yet purchased (short positions), along with any basis for your presentation policy and the related gross amounts that are offset. Finally, if you accounted for repurchase agreements, securities lending transactions, or other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets as sales and did not provide disclosure of those transactions in your

Fiddling While Rome Burns

Think when companies go bankrupt their executives aren't still getting millions? Think Again.

A new study from Harvard Professors Bebchuk, Cohen and Spamann, The Wages of Failure tells us that regardless of running a company into the ground, executives make sure they get theirs.

The study focuses on Bear Stearns and Lehman Brothers.

We find that the top-five executive teams of these firms cashed out large amounts of performance-based compensation during the 2000-2008 period. During this period, they were able to cash out large amounts of bonus compensation that was not clawed back when the firms collapsed, as well as to pocket large amounts from selling shares.

Lehman Brothers was Ice 9

Simon Johnson has coined the phrase, Lehman Brothers was Ice 9. How apt and if you don't know what ice-nine is, read Cat's Cradle.

A new memo was released which showed Lehman Brother's executives knew their bankruptcy would cause a domino effect to start the financial crisis.

Bloomberg got a hold of the confidential memo:

The warning was ominous: “Massive global wealth destruction.”

That’s what Lehman Brothers Holdings Inc. executives predicted before they filed the biggest bankruptcy in U.S. history. “Impacts all financial institutions,” read one bullet point in a confidential memo prepared for government officials obtained by Bloomberg News. “Retail investors/retirees assets are devastated.”

Lehman Brothers - Death Watch?


It's kind of sobering for people who have been listening to the company these last six to nine months that they had everything under control,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``They've got to start thinking about selling a strategic stake or selling the firm because there's just not enough business to go around