Is Dick Fuld Going to Jail?
According to an article recently published on Bloomberg.com, Lehman Brothers Holdings Inc. is now the subject of three United States grand jury investigations. Lehman bankruptcy lawyer Harvey Miller apparently confirmed the news late last week while appearing in Manhattan federal court.
The probes were apparently launched by the New York U.S. attorneys in Manhattan, Brooklyn and Newark, New Jersey. The probes will apparently be focusing multiple issues, including: "possible crimes" associated with Lehman's June stock issue, and their role in the auction rate securities market.
Criminal investigations were sure to follow the company's spectacular flame-out and subsequent bankruptcy filing that took place in mid September.
A number of people and companies have been subpoenaed so far, including:
-Lehman Brothers CEO Dick Fuld
-Ernst & Young LLP, Lehman Brothers' auditor
-Putnam Investments LLC
The investigations will apparently be looking into whether:
a) Lehman Brothers failed to disclose their "eroding" financial condition at the time of their June offering
b) Lehman Brothers "misled" investors about the viability of auction rate securities
A number of former Lehman Brothers executives, including Joe Gregory, Erin Callan and Ian Lowitt, have also been subpoenaed in the matter.
According to the Financial Times, the Manhattan US attorney will be investigating whether "Lehman executives accurately marked the firm's commercial real estate properties on its balance sheet". The US attorney in Brooklyn will be investigating the auction-rate securities matter as well as a management conference call that was held on September 10th, while the Newark US attorney will be investigating the company's June stock sale.
These federal investigations join a long line of other similar investigations involving the likes of AIG, Fannie Mae, Freddie Mac and Washington Mutual.
One thing that is a sure bet - when all is said and done, there are going to be plenty of former executives behind bars.
Sources: Bloomberg - Lehman's Collapse, Stock Sale Probed by Three U.S. Prosecutors
FT.com - Fuld and other Lehman executives subpoenaed
Filed under: The Economic Meltdown | Stock Market Scandals