Federal investigators slapped the top Lehman Brothers staff who helped drive the company in the ground with a dozen subpoenas on Friday.
Prosecutors have stepped up the investigation into the collapse of Lehman Brothers, with at least a dozen subpoenas being issued including one to the investment bank’s chief executive, Richard Fuld, The New York Times reported on Saturday.Citing people close to the probe who requested anonymity, the Times said federal prosecutors in Brooklyn, Manhattan and New Jersey were examining events leading to Lehman’s collapse and bankruptcy filing.
One person said New Jersey prosecutors were looking into whether Lehman executives including Fuld misled investors involved in the $6 billion infusion of capital announced by Lehman in June about the bank’s condition, the Times said. That infusion came as Lehman disclosed a $2.8 billion third-quarter loss, which caused its shares to plunge.
The Times said the New Jersey Division of Investment, which put money into the capital raising, had been subpoenaed, and that the division’s director did not return a call seeking comment.
Brooklyn and Manhattan prosecutors meanwhile are looking into remarks made by Lehman executives during a September 10 conference call, which was five days before the company’s bankruptcy filing, the newspaper said, and are also investigating whether Lehman assigned proper values on its large commercial real estate holdings.
Update: More information from the Cleveland Leader on the subpoenas being issued.
Barclays Bank, who bought Lehman’s North American brokerage, was also subpoenaed, as have Lehman’s accountants and the New Jersey Division of Investments, which runs a pension fund that lost $115.6 million on a $180 million investment in the June stock sale.
Update II: The International Herald Tribune notes that lawyers have a case emerging from the chaos.
Miller said the failed investment bank hopes to be able to offer more details to creditors on the state of their cash and collateral within 45 to 60 days. Miller said the biggest obstacle that lies ahead is the unwinding of 1.5 million derivatives contracts, a task that will take a long time to complete.
Investment funds using the Harbinger name – which say they are owed more than $250 million – have asked to depose Lehman’s Chief Financial Officer Ian Lowitt and examine internal documents for details about any assets transferred in the month before Lehman filed for bankruptcy.
Partly at issue in Harbinger’s request is $8 billion that Lehman Brothers’ European business has said was wrongly kept by Lehman’s parent company, money the European arm felt should have been sent back the day of the filing.
Miller, Lehman’s lawyer, said it was not true that $8 billion had been transferred and that Lehman Brothers Europe actually owed more than $8 billion to the Lehman parent company. The Lehman parent company in turn owes the European unit a separate $2 billion to $3 billion, he said. Miller also said there was no evidence of anything out of the ordinary in any transfer of assets between the two.
For the rest of the Lehman Collapse – Reuters Link. (H/T to House of Roberts for the updates)