Huffington Post:
The examiner in charge of investigating the bankruptcy of venerable Wall Street investment house Lehman Brothers, the most expensive bankruptcy in U.S. history, said in a report publicly released Thursday that senior officials failed to disclose key practices, opening them up to legal claims, and that JPMorgan Chase and Citigroup contributed to the firm's collapse. In addition, the report concludes that the firm's auditor, Ernst & Young, failed to meet "professional standards."
The exhaustive report was unsealed today by Judge James M. Peck, who said the report reads "like a best-seller."
The examiner, Anton Valukas, also found that parties have claims to pursue against JPMorgan Chase and Citibank in connection with their behavior regarding the modification of agreements with Lehman and their increasing collateral demands in Lehman's final days. These demands had a "direct impact" on Lehman's diminishing liquidity -- its cash on hand -- which was a prime reason behind the firm's demise.
"Citi is reviewing the report, which is over 2,000 pages long, but notes that, based on its preliminary review, the examiner has not identified any wrongdoing on Citi's part -- or anything that would suggest that Citigroup helped cause Lehman's collapse," said Danielle Romero-Apsilos, director of corporate affairs for Citi Institutional Clients Group.
The examiner's report notes:
The business decisions that brought Lehman to its crisis of confidence may have been in error but were largely within the business judgment rule.The business decisions that brought Lehman to its crisis of confidence may have been in error but were largely within the business judgment rule.
But the decision not to disclose the effects of those judgments does give rise to colorable claims against the senior officers who oversaw and certified misleading financial statements -- Lehman's CEO Richard S. Fuld, Jr., and its CFOs Christopher O'Meara, Erin M. Callan and Ian T. Lowitt.
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