Lehman probe stalls; execs may escape charges: report

CHICAGO Sat Mar 12, 2011 11:22am EST

Christie's employees pose for a photograph with a Lehman Brothers sign at Christie's in central London September 24, 2010. REUTERS/Andrew Winning

Christie's employees pose for a photograph with a Lehman Brothers sign at Christie's in central London September 24, 2010.

Credit: Reuters/Andrew Winning

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CHICAGO (Reuters) - A government probe into the fall of Lehman Brothers Holdings Inc has hit so many snags that enforcement officials fear they may never be able to bring civil or criminal charges against company executives, the Wall Street Journal reported on Saturday.

According to the paper, Securities and Exchange Commission officials have begun to doubt they can prove that Lehman broke U.S. laws by moving nearly $50 billion in assets off its balance sheet to make it appear that the securities firm had lowered its debt burden.

Quoting people familiar with the situation, the Journal said SEC officials are also worried they might not win any lawsuit against former Lehman Chief Executive Richard Fuld Jr accusing him of improperly accounting for the value of a large real estate portfolio acquired with the takeover of Archstone-Smith Trust, or to hide losses to investors related to that deal.

If the SEC decides not to file charges against Lehman, the securities firm could escape criminal prosecution because the Justice Department often takes its lead from the SEC, the newspaper said.

(Reporting by Julie Steenhuysen; Editing by Vicki Allen)

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Comments (13)
Janeallen wrote:
It is well known that Lehman consulted its highly paid team of lawyers to find a loophole in the law to fix the books so that its top level executives had the time to sell off its bonds and assets, (much of it to foreign countries, particularly Asia, Hong Kong, where investors have an extra hurdle of standing to sue Lehman in American courts).

It’s seems that those lawyers “did their job”! Don’t be surprised that those same lawyers will be “rewarded” by being recruited by the top corporations in Wall Street to find the next loophole for the next Wall Street unethical onslaught on American taxpayors as well as on international victims.

Mar 12, 2011 3:24pm EST  --  Report as abuse
TLeslie wrote:
Obviously this is not shocking to the average working class American… more or less expected.

Mar 12, 2011 3:34pm EST  --  Report as abuse
What most average Americans seem to choose to be blind to:

(1) like Enron, even though the law didn’t cover the exact crime, they found a way in Enron to convict the head of Enron for fixing the books.

The difference here is that they failed because the unethical accounting cover up was not only effectively sanctioned, but practically corroborated by Paulson, the U.S. Secretary of Treasury at the time.

To convict them for what Paulson knew very well but failed to do anything before the economy collapsed would make the entire U.S. executive branch of government liable also. They can’t find a way to do what they did in Enron, because the Treasury Secretary knowingly delayed and actually tried to help cover up the unethical problems.

(2) Even though the British have been, and are still livid, and have put pressure on the Obama Administration to be tougher, it did not work. That pressure was one remaining hope that the Obama Administration would do something to save face.
They’ve been livid because our own Treasury Secretary then, Paulson, tried to pull strings behind the scene to sell the toxic skeleton of Lehman to a big British bank just before the truth of Lehman failure became public, and the world economy lost confidence in the United States economy. Everybody started selling off. Then the rest is history.

Obama’s keeping Bernanke from the Bush days to head the Federal Reserve
also makes Bernanke vulnerable for liability. Bernanke still says how would anyone know the gravity of the toxic debts. Well, he had every reason to know, if Paulson corroborated in helping Lehman to dupe the British and sell the toxic assets off.

If Paulson knew, how come Bernanke did not know?
If Bernanke knew, how can we “blame” Lehman alone?

There’s no way to convict Lehman Brothers the same way we convicted Enron, even though legal loopholes underlie both cases. Both had been well planned by the lawyers.

(3) Paulson did not bail out Lehman because he said in an interview that his wife invoked their Christian Scientist faith, read from the Bible, and said that it would be “OK”! Well their family economy turned out OK, but not the world economy.

Nobody could blame the Asian and European investors for losing confidence in the integrity of the American economic system. Who wouldn’t start welling when the highest rated bonds fail without any public notice?

The BOTTOM LINE is:
THE WORLD DOESN’T SEE EVIDENCE THAT AMERICA HAS LEARNT OUR LESSON.
IF INTERNATIONAL INVESTORS DON’T TRUST US, THEY’LL INVEST ELSEWHERE.
THAT’S WHY WE ARE SO SLOW TO RECOVER.
THE REST OF THE WORLD DOESN’T GET THE ASIA-BASHING NEWS NEARLY AS MUCH AS US BECAUSE THEIR AUDIENCE WON’T BELIEVE IN IT.
WE DON’T BELIEVE IN IT DEEP DOWN EITHER, BUT IT FEELS GOOD FOR MANY TO BASH SCAPEGOATS WHO DON’T HAVE RIGHTS TO VOTE HERE.

ONE PROBLEM IS: THEY THINK THEY’VE SHIRKED THEIR BLAME.
IN FACT, THEY REALLY HAVE MADE THINGS WORSE.
THE WORLD SEES AMERICA AS NOT FACING THE TRUE PROBLEMS.
WON’T THOSE INVESTORS KEEP STAYING AWAY?
CAN WE BLAME THEM?

Mar 12, 2011 4:42pm EST  --  Report as abuse
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