An official report indicates that the now-defunct US financial services firm Lehman Brothers used misleading accounting ploys to eliminate $50 billion of troubled assets. The 2,200-page report by a court-appointed examiner explains how executives of the company manipulated their balance sheet to make their finances appear more robust.
The report says Lehman temporarily shifted the troubled assets in the months before its collapse to conceal its dependence on borrowed money.
The new finding could result in new legal liability for former officials at the firm.
They added that then-Lehman CEO Richard S. Fuld Jr. was "at least grossly negligent" and that the accounting firm Ernst & Young could be accused of professional malpractice.
“It's a very damaging report and certainly is something that is going to be carefully scrutinized by federal prosecutors,” said Robert Mintz, a former justice department prosecutor who is a private defense attorney.
Lehman Brothers' collapse in 2008 shook financial markets worldwide and sparked the worst stage of the financial crisis.
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