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« CHART: U.S. Mortgages Outstanding By Interest Rate | Main | 20 Links - Moody's Slashes Ireland, Warns On France; Bailed Out UK Bankers Plot Huge Bonuses; Berlusconi Outed By Twitter Rampage; Billionaires On The Warpath »
Monday
Dec202010

REPO 105 LIES: Ernst & Young Will Be Hit With Fraud Lawsuit Over Lehman Audits: Cuomo Source

We've covered the story of Lehman fraud in great detail...

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Breaking story...

(Bloomberg) - Ernst & Young LLP may be sued for fraud as early as today by New York Attorney General Andrew Cuomo for allegedly helping Lehman Brothers Holdings Inc. mislead investors, according to a person familiar with the matter.

Cuomo will be sworn in as governor on Jan. 1. The suit would relate to Ernst & Young’s audits of Lehman financial statements aimed at downplaying its liabilities, said the person, who wasn’t authorized to speak publicly about the case. The fraud suit would be brought under the state’s Martin Act, said the person, adding that a settlement is possible.

Richard Bamberger, a spokesman for Cuomo’s office, declined to comment. Charles Perkins, a spokesman for Ernst & Young, declined to comment. The Wall Street Journal said earlier today a lawsuit might be filed this week.

Lehman, once the fourth-largest investment bank, failed in September 2008 because of risky real estate bets and too much debt including Repo 105 trades, which it tried to hide from investors, according to bankruptcy examiner Anton Valukas’s report. Valukas, in the report, said Ernst & Young could be accused of “professional malpractice” for its role as auditor.

Repo 105 transactions are a form of short-term financing that Valukas said Lehman used to move as much as $50 billion off its balance sheet temporarily to show investors it wasn’t carrying too much debt.

The Repo 105 transactions were sale and repurchase agreements, so that Lehman was obligated to buy them back, swelling its leverage again.

Material Impact

“The balance sheet manipulation was intentional, for deceptive appearances, had a material impact on Lehman’s net leverage ratio” and caused financial reports to be misleading, Valukas wrote of the defunct New York-based company. Higher leverage undermines a firm’s capacity to absorb financial shock.

Continue reading at Bloomberg...

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The spectacular fall of Lehman CEO Erin Callan...

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Excerpt - The Last Days of Lehman - Film Trailer

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Background reading from the archives...

 

 

 

 

 

 

 

 

 

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Reader Comments (11)

Europe stumbles blindly towards its 1931 moment

It is the European Central Bank that should be printing money on a mass scale to purchase government debt, not the US Federal Reserve.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8132689/Europe-stumbles-blindly-towards-its-1931-moment.html
Dec 20, 2010 at 2:28 PM | Registered CommenterDailyBail
Portugal next as EMU's Máquina Infernal keeps ticking

The Portuguese seemed baffled - and pained - that investors should link their country in any way with Greece or Ireland. I am afraid they must come to terms very soon with some unpleasant facts.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8149932/Portugal-next-as-EMUs-Maquina-Infernal-keeps-ticking.html
Dec 20, 2010 at 2:28 PM | Registered CommenterDailyBail
Interest rates 'will have to rise sixfold in two years'

Interest rates will have to rise almost sixfold over the next two years to cope with rising inflation, business leaders have warned.

http://www.telegraph.co.uk/finance/personalfinance/8212723/Interest-rates-will-have-to-rise-sixfold-in-two-years.html
Dec 20, 2010 at 2:29 PM | Registered CommenterDailyBail
Ambrose Evans-Pritchard

Self-righteous Germany must accept a euro-debt union or leave EMU

If Germany and its hard-money allies genuinely wish to save the euro – which is open to doubt – they should stop posturing, face up to the grim imperative of a Transferunion, and desist immediately from imposing their ruinous and reactionary policies of debt deflation on southern Europe and Ireland.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8212936/Self-righteous-Germany-must-accept-a-euro-debt-union-or-leave-EMU.html
Dec 20, 2010 at 2:30 PM | Registered CommenterDailyBail
Reeks of Arthur Anderson and Enron.
Dec 20, 2010 at 3:53 PM | Unregistered Commenterjohn
yes it does john...and as i've written..lehman was not alone...they all did it...
Dec 20, 2010 at 4:40 PM | Registered CommenterDailyBail
Where there is smoke....................
Dec 20, 2010 at 5:49 PM | Unregistered Commenterjohn
great link...taibbi was very thorough...must be because he only writes a few stories per week...
Dec 21, 2010 at 3:00 AM | Registered CommenterDailyBail
Wind farm owner’s inability to refinance debt raises questions about health of renewable energy market

http://bangordailynews.com/2013/08/27/business/wind-farm-owners-inability-to-refinance-debt-raises-questions-about-health-of-renewable-energy-market/
Aug 29, 2013 at 6:45 AM | Unregistered Commenterjohn

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