A court-appointed expert blamed the collapse of investment bank Lehman Brothers on its top management as well as audit firm Ernst & Young and banks Citigroup and JPMorgan Chase. The 158-year-old bank filed for protection in September 2008 in the largest US bankruptcy filing in history, leaving the future of 25,000 staff in jeopardy and sending a financial tsunami across the globe.
In a scathing 2,200-page report, Anton Valukas accused the senior management of "actionable balance sheet manipulation" and said they oversaw and certified decisions that exacerbated Lehman's woes. The senior management he referred to comprised former Lehman chief executive Richard Fuld, former chief financial officer Erin Callan, former executive vice president Ian Lowitt and former managing director Christopher O?Meara.
Valukas also cited "colorable" claims against Ernst & Young "for among other things its failure to question and challenge improper or inadequate disclosure in those financial statements." The bankruptcy examiner said Citigroup and JPMorgan helped cause Lehman's collapse by demanding more collateral and modifying guarantee agreements in the investment bank's "final days."
"The demands of collateral by Lehman's lenders had direct impact on Lehman's liquidity pool, Lehman's available liquidity is central to the question of why Lehman failed," he said. Valukas also commented on Barclays's purchase of Lehman?s North American brokerage, saying a "limited amount of assets" belonging to Lehman were "improperly transferred" to the British bank.