SEC, Fed Teams Knew of Lehman Problems
March 16, 2010 7:49 AM
According to NY Times, two years ago, Fed and SEC (Securities and Exchange Commission) troops were sent to Lehman's office to check on their books after a near collapse of Bear Stearns. The teams were sent to validate Lehman's books and records after public criticism from some hedge fund managers in New York, including David Einhorn.
According to a 2,200-page report on the Lehman Bankruptcy, the bankruptcy examiner, Anton R. Valukas, said that Lehman was using creative methods of accounting and valuations. It is said that Lehman repeatedly used the Repo 105 method of accounting to hide its problems. It is still a mystery as to why red flags were not raised after the scrutiny of its books by the Feds. In fact, if Lehman is prosecuted over this, it has a powerful argument in that the government always knew what was going on.
