Lehman’s Hidden Leverage ‘Shenanigans’ May Haunt Fuld - Proskauer Rose - Lehman Brothers

"" By Joshua Gallu and David Scheer

March 13 (Bloomberg) -- Lehman Brothers Holdings Inc.’s Richard Fuld exuded confidence as he briefed analysts on June 16, 2008, four days after demoting his firm’s finance chief in the wake of a $2.8 billion quarterly loss.

“I am the one who ultimately signs off and I’m comfortable with our valuations at the end of our second quarter,” then- Chief Executive Officer Fuld said on the conference call. “We have always had a rigorous internal process.”

The rigor was based on a shaky foundation, according to a 2,200-page report about the firm’s demise by Anton Valukas, the examiner for the bankrupt firm. Lehman Brothers “reverse- engineered” a key measure of stability, masking the firm’s true financial condition, Valukas said. Some asset valuations were also “unreasonable,” he said.

Keen to show that it had reduced leverage, a gauge of a company’s ability to withstand losses, Chief Financial Officer Ian Lowitt said on the June 16 call that the firm had shrunk its net leverage ratio to 12 times from 15.4 in the second quarter.

It accomplished the feat by reducing net assets by $70 billion, said Lowitt, who had just replaced Erin Callan in his post. “We’re going to operate conservatively,” he said.

Unbeknownst to shareholders, the firm was hiding $50 billion in assets through off-balance-sheet transactions known as Repo 105s that temporarily removed holdings until days after the quarter closed, according to Valukas. In the first quarter, the firm had used the same strategy to hide $49 billion in assets, he said in the report.

‘Shenanigans’

Lehman Brothers actions amounted to no more than “shenanigans,” said Sanford C. Bernstein & Co. analyst Brad Hintz, a former Lehman chief financial officer. “If all you’re doing is hiding something behind the curtain, the financial strength isn’t there.”

The repos helped prop up Lehman’s credit rating, Valukas said. The off-balance dealings required more collateral than if Lehman had opted for ordinary transactions visible to shareholders, he said.

“Repos were just one of many ways to hide losses,” said Janet Tavakoli, president of Chicago-based financial consulting firm Tavakoli Structured Finance Inc. “All of the former investment banks used those techniques. All of them borrowed too much money and were overleveraged.”

Lehman Brothers bolstered capital by raising about $12 billion from investors during the first half of 2008, a time when Valukas said the New York-based firm’s financial statements were misleading.

‘Grossly Negligent’

Investors included Blackrock Inc., the largest publicly traded fund manager in the U.S., a venture run by former American International Group Inc. CEO Maurice “Hank” Greenberg, and New Jersey government retirees.

Fuld, 63, was “at least grossly negligent in causing Lehman Brothers to file misleading periodic reports,” Valukas said.

Fuld’s lawyer, Patricia Hynes, disputed the examiner’s conclusions.

“Mr. Fuld did not know what those transactions were -- he didn’t structure or negotiate them, nor was he aware of their accounting treatment,” Hynes said in a statement. She also said none of Lehman’s senior financial officers, lawyers or outside auditors raised concern about the transactions with Fuld.

Robert Cleary, a lawyer for Callan at Proskauer Rose, didn’t return a call seeking comment. Callan, 44, who left Lehman in July 2008 to join Credit Suisse Group AG, stepped down from the Swiss bank Dec. 31, spokesman Duncan King said.

Real Estate Overvalued

Lewis Liman, a lawyer for Lowitt, 46, said in an e-mail that his client did nothing wrong. Lowitt is now chief operating officer at Barclays Wealth Americas, whose parent, Barclays Plc, bought Lehman’s North American brokerage for $1.54 billion.

In its final year, Lehman overvalued real-estate holdings, including a stake in U.S. apartment developer Archstone-Smith Trust, Valukas said. Lehman and Tishman Speyer Properties LP completed a joint acquisition of Archstone for $22 billion, including debt, in October 2007.

Lehman presented “unreasonable” valuations of its Archstone stake in the first three quarters of 2008, overvaluing the holding by as much as $450 million in the second quarter, the examiner wrote.

The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--With assistance from Erik Schatzker and Christine Harper in New York. Editors: Alec McCabe, Dan Reichl.

To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net; David Scheer in New York at dscheer@bloomberg.net. ""

Source of Post
http://www.businessweek.com/news/2010-03-13/lehman-brothers-shenanigans-on-hidden-leverage-may-haunt-fuld.html

Lehman Brothers and Proskauer Rose Connections

More on Lehman Brothers Hidden Assets and Lehman Brothers - Neuberber Berman go to www.RandallWhitestone.com and for More on the Shenanigans of Proskauer Rose LLP go to www.ProskauerSucks.com .

Bert H. Deixler, Proskauer Rose LLP, representing the wrong side of the Moral Compass - in True Proskauer Rose Style.

The Motion Picture Television Fund (MPTF) certainly is standing on the Wrong side of the Moral Compass and it looks like the boys at the top are getting Filty Rich from it. And who is Representing the Motion Picture Television Fund (MPTF)in this Elder Abuse, Elder Quality of Life - Human Rights Smackdown.... YEP you Guessed it - Proskauer Rose LLP. For the Motion Picture Television Fund (MPTF) there is 2 Berts we are told and one is Bert H. Deixler, Bert Deixler of Proskaur Rose - Los Angeles.

So you can bet that those at the Top raking in all the money while Elders, Real People with Real Lifes Suffer. Proskauer Rose has so many Connections and Affiliations they truly are above the law, above human suffering and well I am sure this is just another case of where the Proskauer Rose LLP Client will also be above the law, above Morals and Ethics and Above Social Responsibility to the Quality of Life of our Honored Elders.
Seth Ellis

Seth Ellis
More on this Important Issue that
Proskauer Rose LLP seems to be on the Wrong Side of
www.SavingTheLivesOfOurOwn.org

Proskauer Rose - Bert Deixler
More Videos Click Here

Where there is Human Rights Violations, and the Ruin of Human Lives and Quality of Life, there is Proskauer Rose.

Bert Deixler, Proskauer Rose LLP seems to Be Representing the Wrong side of the Moral Compass on this One... no surprise as We see What Horrors that Proskauer Rose LLP is Capable of.

There will soon be an ENORMOUS amount of information on our sites about what Prokauer Rose LLP is up to in the Legal Representation of the Motion Picture & Television Fund as this Case of Severe Elder Cruelty - Neglect and Abuse hits the Blogs, Media and Newstands everywhere exposing what is Really Going on and Who is the Greedy Gate Keeper behind it all.

There will be much more posted about Proskauer Rose and this INTENSE Moral and Social Disgrace Coming SOON... here are a few tidbits on the situation for now...

www.SavingTheLivesOfOurOwn.org

http://www.youtube.com/user/savinglivesofourown

The Video below lays out the MPTF new philosophy
http://www.youtube.com/user/savinglivesofourown#p/u/4/YUB6T2X7kRE

Online petition
http://www.thepetitionsite.com/1/keepthemptfhomeopen


Proskauer Rose seems to always be found on the Wrong Side of the Moral Compass, Guess there is MORE money to be made on that Side.

Well whatever is the Fate of the Motion Picture -Television Fund and these Precious elderly Lives... one thing we can be sure of It will be the Legacy of ALL those on the Wrong Side of the Moral Compass for as Long as the Internet Exists.

Right is Right and Wrong is Wrong.

Nothing is more important then the Dignity and Quality of a Human life and those who take that for the exchange of COLD - in-Humane - Cash .. well they have some serious issues to face one day with the Great Spirit. But for Now.. Our Network has joined the Folks at www.SavingtheLivesOfOurOwn.org and we intend to get to the Bottom of every single piece, player and part of this incredibly important Issue and Especially the Role of Proskauer Rose LLP in this Disgrace against Our Elderly Americans.

So stay Tuned as our Investigative Blogger, Elder Abuse and Quality of Life Network and our Industry Whistleblower Network Joins to Save the " Lives of Our Own" Elder Care facility for those in the Motion Picture Industry.

Stay Tuned as we Explore all the Players and Issues of the Motion Picture -Television Fund, Frank Mancuso, Joe Fischer, Jeffrey Katzenberg, Bert Deixler,Bert Fields, and lots more information on This "News to Me".

I fear the Worst however Because if Proskauer Rose is involved IN ANY Way.. you can bet there will be pay offs, dirty deals, Supreme Court Pay Offs, Attorney Fraternity - Good Ol' Boys Protecting their Own, and Conflicts of Interest that would Shock You. And the Truth and Facts of the Case... well that will Certainly be No Defense.

You can bet that what Proskauer Rose wants Proskauer Rose will get and the Life of Your Loved Ones, YOUR quality of Life, well that is Just Collateral Damage in the High Stakes Game of MONEY - Money and More Money that Proskauer Rose is Living in and Controlling at the Highest of Levels in the US Judicial System, Corporations, and so much more it would Scare YOU !!!

Stay Tuned..

Posted by
Crystal L. Cox
Investigative Blogger
Industry Whistleblower
more on this at
www.ProskauerRoseSucks.com

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Crystal@CrystalCox.com