Lehman Brothers examiners report

John_Pierpoint

I love the automatic Google ads down the right hand side.

nearlynew

Lehmans were involved in fraud - just the same as all the other banks.

An even bigger fraud was carried out by the government convincing people that letting them go bust was what caused the further fallout.

worldtraveller

Lehman Brothers Holdings Inc. used a firm it controlled to shift investments off its books before its collapse, the New York Times reported, citing an internal Lehman document and ex-employees the newspaper didn’t identify.

The use of Hudson Castle, which functioned as an “alter ego” firm, may have obscured Lehman’s financial condition prior to its bankruptcy filing, the newspaper said, citing a former Lehman trader. The investment bank didn’t disclose details about its ties to Hudson, which hasn’t been accused of misleading accounting practices or illegal transactions, the Times said.

Relationships with such entities, which mostly operate beyond regulators’ control, allow Wall Street firms to swap risky investments for cash and make their financial position appear stronger, the Times said. Major banks continue to undertake similar deals with entities whose names aren’t widely disclosed, the paper said.

Lehman owned 25 percent of Hudson and controlled the board, and the firm also hired former Lehman employees, the newspaper said. The bank had transactions worth more than $1 billion with Hudson vehicles, the Times said. It wasn’t clear how much money was involved after 2001, according to the report.

The New York-based company in 2001 bought a $7 million stake in IBEX Capital Markets, which later became Hudson Castle, the newspaper said. The Wall Street firm planned to serve as a “gatekeeper” for Hudson’s operations under a structure proposed by Lehman employee Kyle Miller, the Times said, citing a 2001 memorandum. The smaller firm was to provide financing for Lehman and its clients, according to the report.

The Times said a Hudson Castle spokesman it didn’t identify by name said that after 2004, “all funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way.”

On the company overview section of Hudson Castle’s Web site, the company says: “We are predominantly employee-owned, are not part of a larger company and no outside party has a controlling interest in our firm.”

The Securities and Exchange Commission is investigating creative borrowing tactics used by about 20 companies, the newspaper said. A Congressional panel plans to discuss the transactions with a focus on Lehman and Bear Stearns Cos. at a hearing in May, the Times said, citing two people familiar with the matter.

While most of the transactions were legal, some Lehman deals “crossed the line,” the newspaper said, citing a report last month on the firm’s collapse prepared by a bank examiner. Hudson Castle wasn’t mentioned in the report, which stated that Lehman’s bookkeeping was “materially misleading.”

BusinessWeek

movilogo

That report has 239 pages.

Can someone explain the summary within 500 words?

PS: Never mind, the page 15 (or 59 in document) explains the things in a nutshell

Which is (my summary)

Due to deteriorating values of its assets (mostly real estates), lenders lost confidence
in LB to lend them more money. So, LB had a cashflow problem and they could not meet their current obligations. So, they went bust. Simples

Charterhouse

movilogo wrote: »

Due to deteriorating values of its assets (mostly real estates), lenders lost confidence
in LB to lend them more money. So, LB had a cashflow problem and they could not meet their current obligations. So, they went bust. Simples

Quite a bit more complex than that.......

sabretoothtigger

Lehman, which spent $731.6 million on bankruptcy advisers and managers through March 31, is liquidating to pay creditors. It has said it will spend five years selling assets to pay unsecured creditors as little as 14.7 cents on the dollar.

:eek:
http://www.bloomberg.com/apps/news?pid=20601110&sid=ajcn6aoTHu5k