5 years ago, on September 15, Lehman Brothers, the 4th largest investment bank in the US, collapsed. The failure of Lehman converted a recession that started several months earlier into the Great Recession.
So has anyone at Lehman done anything wrong? Apparently not. This article describes the end of attempts to prosecute Lehman personnel. Prosecution concluded they did not have a chance to win.
Now, I am not a lawyer, and perhaps the reporting is inaccurate. But I had a laugh when I read the following explanation about Repo 105 and Dick Fuld, the CEO: "Bart H. McDade, another Lehman executive, told Mr. Valukas that Mr. Fuld “was familiar with the term” Repo 105 and “knew about the accounting.” But Mr. Fuld told the S.E.C. that he had never heard of Repo 105, officials said, undermining a potential case."
Rep 105 was an accounting trick to reduce the bank's leverage reported in quarterly report. It seems that prosecution gave up when the CEO said he has not heard about it.
It could be that, indeed, Lehman failed because of bad business decisions, not criminal acts. But following the biggest financial crisis in history it is hard to believe that there was no outright fraud in the entire financial industry. You can read more on the topic here.
So has anyone at Lehman done anything wrong? Apparently not. This article describes the end of attempts to prosecute Lehman personnel. Prosecution concluded they did not have a chance to win.
Now, I am not a lawyer, and perhaps the reporting is inaccurate. But I had a laugh when I read the following explanation about Repo 105 and Dick Fuld, the CEO: "Bart H. McDade, another Lehman executive, told Mr. Valukas that Mr. Fuld “was familiar with the term” Repo 105 and “knew about the accounting.” But Mr. Fuld told the S.E.C. that he had never heard of Repo 105, officials said, undermining a potential case."
Rep 105 was an accounting trick to reduce the bank's leverage reported in quarterly report. It seems that prosecution gave up when the CEO said he has not heard about it.
It could be that, indeed, Lehman failed because of bad business decisions, not criminal acts. But following the biggest financial crisis in history it is hard to believe that there was no outright fraud in the entire financial industry. You can read more on the topic here.
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