Last month, i did a blog entry . The issue there was the size of the bonuses given out in the lead up to the bankruptcy. Which raises the obvious question of whether they knew they were going down the gurgler but neglected to inform the market and helped themselves to the piggy bank.
Now The Wall Street Journal reports that criminal prosecutors are investigating whether Lehman Brothers misled investors.
"The probes are at an early stage, and it is far from certain they will lead to charges," the WSJ reports. "Gathering evidence that proves executives broke the law by inflating the values of their firms' assets is difficult. Lehman declined to comment, but in congressional testimony on Monday, Richard Fuld, Lehman's chief executive, said the firm didn't mislead investors. The U.S. Attorney's office for New York's Southern District, in Manhattan, is investigating whether Lehman valued its assets at artificially high levels, say two people familiar with the matter. That office has issued subpoenas to individuals that focus on what the firm told investors and other parties about its valuations for approximately $32.6 billion in commercial-real-estate holdings, according to a person familiar with the matter. Lehman's commercial real-estate portfolio came under review by a number of firms, including Goldman Sachs Group Inc., Credit Suisse Group, Barclays PLC and Bank of America Corp., all of which declined to buy the portfolio. Some executives who looked at the portfolio say they believe the portfolio was being overvalued by Lehman by as much as 35%, as reported in a page-one article in The Wall Street Journal Monday. The Manhattan prosecutors are also interested in whether Lehman improperly moved $8 billion from its London operations to New York just ahead of its bankruptcy filing, a move that has drawn criticism from creditors and accountants, according to two people familiar with the matter. A spokeswoman for the U.S. attorney's office declined to comment. The U.S. attorney's office in New Jersey is investigating whether Lehman misled New Jersey's pension fund when it provided information about its financial health in connection with a $6 billion stock offering in June. New Jersey invested $180 million in the offering. Its loss on the investment totals about $116 million. Aso, prosecutors in the U.S. attorney's office for New York's Eastern District, in Brooklyn, are probing whether Lehman executives misled investors by misrepresenting the firm's condition by making upbeat comments during conference calls with analysts and investors. A spokesman for the office declined to comment."
Meanwhile, Lehman Brothers chief executive officer Richard Fuld is doing a Jeff Skilling. students of US corporate history will remember that the former Enron chief appeared before Congress and claimed that there was nothing wrong with Enron and that it was just a victim of panicking investors.
Well, now Bloomberg reports that Fuld will be telling Congress that Lehman Brothers went under because of a loss of confidence in the market. Talk about deja vu!!!
Is it any wonder that Bloomberg columnist Joe Mysak says bankers have now lost all credibility and it will take them decades to recover.
"As for the bankers, they admitted the ignorance of their actions by going to Washington and asking for a bailout. They didn't understand some of these layers upon layers of securities they had created. They didn't surrender, so much as abdicate. It will be some time before anyone listens to their like again."
no comment untill now