Lehman bankruptcy report

Lehman HQ New York

Jenner & Block, the New York law firm appointed to examine the cause of Lehman's monumental demise have found that failings by executives, bad calls by management and its auditor are to blame for the bank's 2009 bankruptcy.

Jenner & Blocks' Anton Valukas' 2200-page report became public on Thursday, after he had initially submitted it to court earlier in the year. The findings paint a grim picture of Lehman's incompetency with few heroes and numerous alleged culprits, according to ft.com.

Pointing the finger

Valukas accused top Lehman executives of painting a misleading picture of its financial condition during the third quarter of 2008, which ultimately kept creditors and shareholders in the dark about Lehman's financial woes. "Lehman did not disclose [...] that it had been using an accounting device (known within Lehman as "Repo 105") to manage its balance sheet – by temporarily removing approximately $50 billion of assets from the balance sheet at the end of the first and second quarters of 2008," Valukas wrote in the report.

The report laid blame across several of Lehman's top earners, including long-time Chief Executive Dick Fuld, former finance chiefs Chris O'Meara, Erin Callan and Ian Lowitt. "There are many reasons Lehman failed, and the responsibility is shared," Mr. Valukas wrote. He added that Lehman's financial plight "was exacerbated by Lehman executives, whose conduct ranged from serious but non-culpable errors of business judgment to actionable balance sheet manipulation; by the investment bank business model, which rewarded excessive risk taking and leverage; and by government agencies, who by their own admission might better have anticipated or mitigated the outcome."

Valukas also highlighted that a "limited amount of assets" were "improperly transferred" to Barclays, the UK bank that acquired Lehman’s US brokerage business following the collapse.

Remembering the numbers

Lehman had bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion. The bankruptcy capped a 95 percent slide in its stock price and launched a crisis of confidence that sent ripples through financial markets worldwide, sparking the worst crisis since the Great Depression with the Dow experiencing its largest one day point loss.

Ross Densley

Ross Densley is a graduate from Bath Spa University, and has freelanced for several magazines ranging across a section of topics such as animation, business, film and lifestyle. When Ross is not working he writes and edits his own satirical website.

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