Examiner’s Findings Of Claims Against Lehman (LEHMQ) Executives

The court-appointed examiner to enquire into the reasons for the collapse of Lehman Brothers (OTC: LEHMQ), made public his findings on Thursday, in a report.

RICHARD FULD: The examiner found evidence for breach of fiduciary duty against the former CEO for not investigating whether the company was deceiving investors about its leverage by using a repurchase and sale program, known as Repo 105. The report found that Fuld knew, or should have known the company's use of Repo 105 reduced its balance sheet by $49.1 billion in Q1 2008 and $50.4 billion in Q2 2008. The report said Fuld could not recollect discussions of the Repo 105 program.

CHRIS O'MEARA: The examiner said company's CFO from December 2004 to December 2007 actively managed the Repo 105 program. The report said increasing the size of the program required O'Meara's approval. The examiner found that O'Meara set balance sheet targets and leverage ratios at a time when the company was trying to reduce its holdings of souring loans and investments. The report said that O'Meara had limited knowledge of the Repo 105 program.

ERIN CALLAN: Lehman's CFO from December 2007 to June 2008 was warned that the Repo 105 program was a "headline risk" to the company and could damage its reputation if it became public, according to the examiner. She was also told by the company's global financial controller that no competitors used similar programs. The report also quoted her comments on a call to analysts in which she cited asset sales for the company's deleveraging, rather than the use the off-balance sheet repo program. Callan told the examiner her concerns about the program were super ceded by more pressing issues, such as the collapse of rival investment bank, Bear Stearns.

IAN LOWITT: Lehman's CFO from June 2008 was aware of failed attempts to place real estate securities into the Repo 105 and was told of funding problems with counterparties in the program. The report said the officers may be liable to Lehman if the company is subject to liability as result of their actions. It also said that there is no evidence to support claims for breach of fiduciary duty against any board member, except for Fuld.