Lehman Brothers tried to buy itself time by manipulating accounting gimmicks to disguise its bad investments, according to a court-ordered report on the firm's demise. The exhaustive, 2,200 page report found that execs, including former CEO Richard Fuld, could be held legally liable for the "materially misleading" attempt to disguise the state of its finances ahead of its collapse in 2008, the Guardian reports.
Lehman used an accounting trick called "repo 105," in which it temporarily sold assets and bought them back days later, to boost its balance sheet and shuffle bad assets off its books at the end of financial quarters, the report states. The review notes that a company vice-president's warning of accounting irregularities was ignored by auditors Ernst & Young. Fuld was “at least grossly negligent" ahead of the firm's bankruptcy, the biggest in American history, the report concludes.
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