Make us your home page
Instagram

Lehman Bros. executive's letter warned of accounting illegalities

NEW YORK — A Lehman Bros. whistle-blower warned his bosses that accounting gimmicks the bank used before its collapse may have been illegal, his lawyer said Friday.

Matthew Lee, 56, a former Lehman senior vice president, was fired days after questioning the accounting tricks in a letter to his superiors, said attorney Erwin Shustak, who gave a copy of the letter to the Associated Press.

Lehman Bros. Holdings imploded in September 2008, becoming the biggest corporate bankruptcy in U.S. history. The collapse sent financial markets across the globe into a free-fall and prompted a massive bailout of the U.S. banking system.

Anton Valukas, an examiner appointed by the bankruptcy court, said in a 2,200-page report last week that Lehman hid its debt and perilous financial condition by using an accounting gimmick called Repo 105. The report revealed Lee's warnings to the bank, though his letter makes public the first internal assessment of the legality of Lehman's bookkeeping.

In a letter dated May 18, 2008, Lee, a 14-year Lehman veteran, wrote that he discovered the bank had been underreporting its debt by about $5 billion at the end of each month.

"I believe the manner in which the firm is reporting these assets is potentially misleading to the public and various governmental agencies," Lee wrote.

Days after sending the letter, the firm told Lee he was being terminated as part of a general layoff, Shustak said. After his firing, Shustak wrote a letter to the bank saying that Lee "believes he has been the victim of retaliation for bringing what he believed, in good faith, to have been ethical and securities law violations by Lehman."

The bankruptcy examiner's report and Lee's letter could provide a framework for any future legal action against Lehman executives.

Valukas' report doesn't conclude whether executives violated securities laws. It does say executives' decision not to disclose the effects of its business judgments appears to be sufficient evidence to support the awarding of civil damages in a trial.

Lehman Bros. executive's letter warned of accounting illegalities 03/19/10 [Last modified: Friday, March 19, 2010 8:15pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Tampa man pleads guilty to forging check for fake investment

    Personal Finance

    A Tampa resident was convicted Thursday for forging a check for a fake investment. The Florida Office of Financial Regulation said that Eric Franz Peer pleaded guilty. He served 11 months in jail and will have to pay $18,000.

  2. Minority business accelerator launch by Tampa chamber to aid black, Hispanic businesses

    Business

    A "minority business accelerator" program was launched Thursday by the Greater Tampa Chamber of Commerce geared toward helping black and Hispanic business owners identify and overcome barriers to grow their companies. The accelerator, known as MBA, will provide participants with business tools to cultivate opportunities …

    Bemetra Simmons is a senior private banker at Wells Fargo, The Private Bank. She is also chair of the new minority business accelerator program for the Greater Tampa Chamber of Commerce. [Photo, LinkedIn]
  3. Terrier Tri brings unique triathlon training to South Tampa

    Business

    Over a decade ago, Robert Pennino traded late nights in the music studio for early mornings in the Terrier Tri cycle studio.

    Terrier Tri, a cycling studio in South Tampa celebrates a grand opening on June 27. Photo courtesy of Tess Hipp.
  4. New bistro hopes to serve as 'adult Chuck E. Cheese'

    Business

    YBOR CITY — Inside Cheezy's Bistro and Speakeasy, a new restaurant opening in Ybor City, customers will find a mix of family recipes, games and secrecy.

    Cheezy's Bistro and Speakeasy readies to open in Ybor City. Photo courtesy of Cheezy's Bistro and Speakeasy.
  5. Ramadan having an economic impact on local charities, businesses

    Economic Development

    TAMPA — Dodging the rain, a few families and customers gathered inside Petra Restaurant on Busch Boulevard. Around 8:30 p.m., the adham (or call to prayer) music begins, signaling Iftar, the end of the daily fast. Customers grabbed a plate to dig into the feast.

    Baha Abdullah, 35, the owner of the Sultan Market makes kataif, a common dessert that is eaten during the month long celebration of Ramadan in Tampa. [OCTAVIO JONES   |   Times]