LEHMAN Brothers used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008, but there was not extensive wrongdoing, a court-appointed examiner has found.
In a 2,200-page report examiner Anton Valukas, chairman of law firm Jenner & Block, reported the results of his more than year-long investigation into who could be blamed for the firm's collapse, which deepened the global financial crisis.
The examiner said that while some of Lehman’s management’s decisions “can be questioned in retrospect” and the firm's valuation procedures for its assets “may have been wanting,” those responsible for the firm had used their business judgement and were largely not liable for the firm's collapse.
However, he said that Lehman, which is now liquidating for the benefit of creditors, could have claims against former Lehman chief executive Dick Fuld and chief financial officers Chris O'Meara, Erin Callan and Ian Lowitt for negligence or breach of fiduciary duty.
The examiner said there was also sufficient evidence to support a possible claim that the firm's auditor, Ernst & Young, had been “negligent” and that Lehman could pursue claims against the firm for “professional malpractice.”
He did not find that Lehman's directors had explicitly violated their fiduciary duty, but said that Wall Street paid a large role in causing an acute liquidity crisis at Lehman in its final days.