Former Lehman Brothers CEO may be charged by SEC

Dick Fuld, former chief executive officer at Lehman Brothers, may be one of a number of senior figures from the bank potentially facing being charged by the Securities and Exchange Commission (SEC) over its collapse.

Dick Fuld

According to Fox News, the CEO is thought to be one of many top representatives from the financial institution to have recently been engaged in recent meetings over the failure with the regulator.

Questions are believed to have surrounded the use of Repo 105, a banking practice which can be used to provide an artificial impression of the health of an institution’s balance sheet.

Other lines of enquiry are focusing on whether senior figures misled the markets about Lehman Brothers’ stability during the period leading up to its collapse in September 2008.

Joseph Gregory, former president and Erin Callan, ex-chief financial officer, are both reported to be among the executives who could be facing charges alongside Mr Fuld.

An SEC spokesman told City AM: “We cannot confirm or deny any ongoing investigations.”

Lehman Brothers filed for bankruptcy on September 15th 2008 at the height of the global credit crisis.

Dick Fuld strikes back at criticism of Lehman Brothers' Repo 105 use

Dick Fuld, the former chief executive of Lehman Brothers, has launched an attack on the court-appointed examiner who criticized the bank's use of the controversial Repo 105 accounting measure.

In the months before the bank's collapse, Repo 105 was used to keep $50 billion worth of debt off Lehman Brothers' balance sheet by reclassifying repurchase agreements as outright asset sales.

Anton Valukas, the man who spent a year investigating the fall of the bank, was critical of the measure and of the executives who allowed it to happen.

But Mr Fuld has now struck back at Mr Valukas in a statement which also attacked the way the story has been reported in the media.

"The examiner's report distorted the relevant facts, and the press, in turn, distorted the examiner's report," he said. "The result is that Lehman and its people have been unfairly vilified."

Last week, the New York Times reported that Lehman Brothers also engaged in the practice of temporarily transferring risky investments to a small company named Hudson Castle.

Hudson Castle was set up to appear to be independent, but was actually controlled by Lehman Brothers, the report alleged.

SEC requests Repo 105 information from major banks

Mary Schapiro, chairman of the Securities and Exchange Commission, said the agency sent letters to the 19 largest banks requesting information about Repo 105, an accounting strategy that has been blamed for the collapse of Lehman Bros. In testimony at a congressional hearing, Schapiro said the agency is looking into Lehman's use of Repo 105. Former Lehman CEO Richard Fuld said he has "absolutely no recollection whatsoever" about the firm using Repo 105 transactions. Meanwhile, the Financial Accounting Standards Board sent a letter to lawmakers saying it will work with the SEC to make changes to accounting rules for repos.

http://www.marketwatch.com/story/sec-fasb-vow-to-close-lehman-accounting-loophole-2010-04-20

Repo 105 probe launched by SEC

The Securities and Exchange Commission (SEC) is investigating whether financial firms in the US are using Repo 105, the controversial accounting method employed by Lehman Brothers to hide its massive debts in the months before the bank's collapse.

Earlier this month, it was revealed that Lehman Brothers had managed to keep $50 billion worth of debt from its balance sheet using the process, which was described as an "accounting gimmick" by the court-appointed examiner hired to look into the failure of the firm.

More than 20 organisations have now been asked by the SEC whether they have also employed the practice, which works by filing temporary repurchase agreements as permanent asset sales, during the past three years.

Mary Schapiro, chairman of the SEC, told CNBC: "We are looking at the Lehman activity very, very carefully and all the issues surrounding Repo 105."

Earlier this month, Merrill Lynch insiders told the Financial Times that they had warned the SEC about Lehman Brothers' dubious accounting practices as early as March 2008.