SEC's Schapiro says agency still probing Lehman

WASHINGTON Wed Apr 25, 2012 3:02pm EDT

U.S. Securities and Exchange Commission Chairman Mary Schapiro testifies before the House Oversight and Government Reform's TARP Financial Services and Bailouts of Public and Private Programs subcommittee on Capitol Hill in Washington April 17, 2012. REUTERS/Benjamin Myers

U.S. Securities and Exchange Commission Chairman Mary Schapiro testifies before the House Oversight and Government Reform's TARP Financial Services and Bailouts of Public and Private Programs subcommittee on Capitol Hill in Washington April 17, 2012.

Credit: Reuters/Benjamin Myers

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission is still probing Lehman Brothers more than three years after the investment bank collapsed during the global financial crisis, agency chairman Mary Schapiro said on Wednesday.

Schapiro told lawmakers it would be inappropriate to comment on a matter that "remains under investigation," but assured lawmakers that the SEC has conducted interviews with management at the highest levels and has reviewed millions of pages of documents.

"It is still under review," she said at an SEC oversight hearing before a House Financial Services subcommittee.

Schapiro's comments come after "60 Minutes" on Sunday aired a segment revisiting the March 2010 findings by Lehman Brothers Holdings Inc's court-appointed examiner, Anton Valukas.

Valukas' report said that Lehman used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008.

The report focused on an accounting method known as "Repo 105," which Valukas concluded was used for the sole purpose of manipulating Lehman's books and helped contribute to its demise.

He found Repo 105 was used without telling investors or regulators, and that it gave the appearance that Lehman was reducing its overall leverage levels in 2008 when in reality it was not. It was used to temporarily remove $50 billion in assets from its balance sheet.

The "60 Minutes" segment discussed how neither the SEC nor the U.S. Department of Justice have brought charges related to the findings in Valukas' report.

Valukas told "60 Minutes" in an interview that there was evidence to suggest that former Lehman Chief Executive Richard Fuld knew about the accounting gimmick, though Fuld has consistently denied it.

Schapiro said she had seen the "60 Minutes" piece.

She also said that after Valukas issued his report in 2010, she accompanied other SEC attorneys on a visit to meet with Valukas where they discussed his findings for several hours.

She added, however, that "the illegality of conduct is sometimes not quite as clear-cut as it seems to be or as reported to be, and it makes bringing cases extremely difficult."

(Reporting By Sarah N. Lynch; Editing by Gary Hill and Tim Dobbyn)

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