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Something sinister about the lack of prosecutions at Lehman Brothers

"This is the first interview that Chicago lawyer Anton Valukas has given since the publication of his 2,292 page report into the bankrutpcy of Lehman Brothers on March 11th, 2010. At that time, Valukas found strong evidence of financial and accounting fraud designed to deceive investors at the defunct New York-based investment bank. Valukas is surprised, especially given Lehman Brothers’ rampant abuse of Repo 105 to disguise its precarious financial position in the quarters ahead of its September 2008 collapse, that neither Lehman Brothers’ former chief executive Dick Fuld nor any other former Lehman director has been charged with fraud or related offences.

Matthew Lee, a Lehman Brothers’ whistleblower who raised grave concerns about the bank’s deceptive approach to accounting to his bosses — controller Martin Kelly, head of capital markets product control Gerard Reilly, chief financial officer Erin Callan, and chief risk officer Christopher O’Meara — is also interviewed in the CBS programme above. The Englishman, senior vice president in charge of the investment bank’s consolidated and unconsolidated balance sheet, was stonewalled on repeated occasions when he sought to alert Kelly, Reilly, Callan, and O’Meara to evidence of book-cooking. He eventually became so frustrated by their failure to even discuss the issues he went nuclear and sent them this powerful May 16th 2008 letter. But yet again Lehman Brothers’s most senior financial and risk officers muffled their ears. They continued to ignore his warnings and fired him within a week."

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Read Ian Fraser's full post here

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