Lehman Brothers report blames management and audit firms
Lehman Brothers report blames management and audit firms
Friday 12th March 2010
The collapse of Lehman Brothers was in part the fault of the firm's senior executives and auditors Ernst & Young, a report has found.In the 2,2000 page report, Anton Valukas accused the senior management of the firm of "actionable balance sheet manipulation" and said the firm was insolvent for weeks before it filed for bankruptcy.
The collapse of Lehman Brothers in 2008 sparked a global financial crisis which shook the banking industry on a global level.
The court-appointed examiner, Mr Valukas, said there had been no systematic wrong-doing, but warned there could be a case for claims against some of the firm's executives for negligence.
He added there was a case for auditor Ernst & Young to face negligence claims from Lehman Brothers, "for among other things its failure to question and challenge improper or inadequate disclosure in those financial statements".
The report also found that banks Citigroup and JPMorgan helped cause Lehman's collapse by demanding more collateral.
"The demands of collateral by Lehman's lenders had direct impact on Lehman's liquidity pool, Lehman's available liquidity is central to the question of why Lehman failed," Mr Vaulkas said.
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