‘Fundamental Questions’ on Accounts Overlooked by Lehman Directors

Kimberly Watson, Editor in Chief
September 16, 2010 /

Lehman which is the fourth-largest invest bank of US succumbed to mortgage crisis and declared its bankruptcy two years back.  It has left the creditors with a mammoth loss of tens of billions of dollars.

The hardest hit section due to this crisis was Lehman’s employees, stockholders, and bond holders. The customers of the investment bank who were amidst their deals also lost because of the bankruptcy. It came as a hard blow to all who were depending upon Lehman for their investments. The only people who seemed to have gained in this loss are the accountants, bankers, and lawyers. The leading Lehman partners who withdrew just before the final blow were also saved from this crisis.

On investigation the panel of New York County Lawyers was told by Anton Valukas that the crisis could have been averted if the directors of the Lehman had just asked certain questions pertaining to accounting transactions involving the bank. He said it was not difficult to get direct answers if the question were asked at the right time.  He said that the ‘window dressing’ of the firm’s balance sheet made everyone pay heavily eventually.

Anton Valukas further asserted that there were approximately 105 transactions which were used to hide the real financial status of the bank. The assets and liabilities of the bank were not entered in the books and this was not a hidden fact from the top notch employees of the bank.

He reiterated that if the Lehman brothers had not overlooked the bank’s off-balance sheet liabilities things would have been pretty much under control. He said that the reason for this negligence may be attributed to the common belief that positive quarterly balance sheets always look better.

 

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