Insider Warned About Lehman Accounting

[rucky]

Source: Wall Street Journal

Inside Lehman Brothers Holdings Inc., some executives quietly fretted about the firm's accounting as the company headed to the brink in September 2008. Matthew Lee did something about it.

In May 2008, the former Lehman senior vice president wrote a letter to senior management warning that the company may have been masking the true risks on its balance sheet.

Now, the little-known Lehman executive once in charge of "global balance sheet and legal entity accounting" is at the center of allegations that Lehman manipulated its numbers and misled investors.

His warnings, revealed for the first time in a report by a U.S. bankruptcy-court examiner, show that Lehman's auditors knew of potential accounting irregularities and allegedly failed to raise the issue with Lehman's board.

Read more: http://online.wsj.com/article/SB10001424052748703447104575118122594094284.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond

[xchrom]

1. Recommend

[DallasNE]

2. Enron, All Over Again

Senior management keeps the Board in the dark. An insider warns senior management without realizing that those same senior managers are at the heart of the problem.

Once again we learn the hard way why oversight and regulation are a necessary cost of doing business. This country was rocked by the robber barons a hundred years ago so companies were split up and regulation put in place. Thanks to Reagan and the Bush's the regulation was gutted and we once again face the spectacle of robber barons on the loose only this time we do nothing about it. Now just how stupid is that. And with it taking 60 votes in the Senate we are assured that nothing will happen to reign in this type of corporate behavior.

[420inTN]

3. There is oversigt and regulations

But almost anything can be hidden underneath mountains of paperwork and "creative accounting".

[InkAddict]

4. My take on things now since there is corporate personhood: spouses can't be

compelled to testify against one another. Mountains of paperwork and creative accounting are no longer necessary. Silence is Golden.

That certainly leaves room for blackmail of the ex-lover as a lucrative option, too.

[truthisfreedom]

12. If there's corporate personhood, there should be the death penalty.

[JoeyTrib]

20. Ha ha

:rofl:

[DallasNE]

5. Insiders Are Warning Of The Problem

So why aren't the regulators seeing the same problems and why don't the insiders simply go to the regulators. I am sure that it is partly to keep it inhouse but also partly because nobody trusts that the regulators will do anything about it. That is what happens when the regulators come from the very companies they are supposed to regulate. Cox at the SEC was the prime example. He was an even worse appointment than Brown at FEMA.

[420inTN]

6. Regulators may not see the raw data before it is "massaged".

And is Cox worse than Geithner or Poulson?

[No Elephants]

14. Telling senior management the books are cooked is like telling the guy robbiing the bank that a hold

up is in progress. However, given the SEC was warned several times about Madoff, along with an explanation of what he was doing, and nothing happened shows telling regulators may have done nothing either. But, I think this guy just wanted to keep it inhouse, for whatever reasons.

[Dr.Phool]

13. There was no oversight, and the regulations were ignored.

How many times was the SEC warned about Bernie Madoff?

[Bozita]

7. Will Ernst & Young Survive The Lehman Fiasco?

http://www.businessinsider.com/will-ernst-and-young-survive-the-lehman-fiasco-2010-3

Will Ernst & Young Survive The Lehman Fiasco?
John Carney | Mar. 12, 2010, 2:22 PM | 1,520 | 23
Tags: Wall Street, Litigation, Lehman Brothers, Accounting, Bankruptcy

Ernst & Young is standing behind the work it did for Lehman Brothers.

But the example of what happened to Enron accountants Arthur Andersen should have E&Y very worried.

In both its public statement released today and in interviews with the bankruptcy examiner, E&Y says it agreed to the
Repo 105 transactions only in theory. It apparently never blessed or even evaluated any particular transaction, much
less audited them or assessed the impact of them on the balance sheet.

The examiner says that the firm may nonetheless have committed professional
malpractice.

-snip-

“Enron brought down Arthur Andersen,” Felix Salmon notes. “Will Lehman do the same for E&Y?”

-snip-

more...

[JackRiddler]

11. Don't get our hopes up. Why do Moody's and S&P still exist...

after the monumental global fraud they practiced with mortgage-backed securities?

[Bozita]

16. While you ponder the answer to the question, here's a little musical interlude for you ...

An E&Y morale-building training video:
http://www.youtube.com/watch?v=MaIq9o1H1yo&feature=player_embedded#

I give the melody a 10. The lyrics get a 2.

[Bigmack]

8. I'm gonna be REAL interested to see

how much attention THIS story gets by the end of today. Just out of curiosity, I looked at the # of hits other sites were getting compared to this story, and lesbian prom dates are getting WAY more attention that HARD news about incredibly important stuff that TRULY deals with the economic and political health of this strange land. And THIS site attracts WELL informed folks..... Ms Bigmack

[rucky]

9. It's really up to the FTC

and whether they take action or not. Chances are it's one of those daily outrages that go back to the memory hole by monday.

[JackRiddler]

10. If only they'd made it into 2009, when unlimited book-cooking was authorized...

in the form of suspension of "mark-to-market," probably the only thing that's keeping the Giant Zombies (BoA, Citi, JPM) afloat. That was the moment when capitalism dropped its market pretenses and announced: L'etat, c'est moi.

[gratuitous]

15. And Lehman's CEO didn't know a thing about any of this

See, money was just falling out of the sky into his pocket. Sure, it might have seemed a little weird that overpriced junk was being parked off the balance sheets at the end of the quarter only to be bought back as soon as the new quarter started, but what's suspicious about that? Isn't it bonus time again?

[girl gone mad]

18. Hey, don't be begrudging him!

[Oak2004]

17. Lets look forward

What's a crashed global economy, really, when there's a forward to look to? Baseball stars make gizillions too and sometimes people get mad at them for striking out and stuff. Forward, ever onward!

Wake me up when someone rich and powerful actually goes to jail for this crap.

[closeupready]

21. You'll be sleeping for quite a while, I think.

n/t

[Po_d Mainiac]

19. Time to kick this back up

:kick:

[Bozita]

22. kjck for the at-work crowd