The Lehman brothers did not act ethically. Executives took risks and were rewarded beyond reason when there was a good outcome. Oliver Budde who was an associate general counsel spoke up and tried fighting this but this was unsuccessful. Executives were making bad calls. The executives also wrote up misleading reports and manipulated them. If they saw an asset on a report they didn’t like, they wrote them off instead of selling them at a loss. It sounds like they didn’t want to take less money if this is being understood correctly. People have lost confidence in the market because of these executives doing wrong things, and have no regard for how their actions will affect other people. They figure if a few will do this, other companies may do the same. Then investors lose money due to the bankruptcies. The government should intervene and people who want to do the right thing should turn to attorneys for legal action to be taken. A way to go is to let these companies stay in business but the people who want to wrong others need to be dismissed, and if possible, face prison time and that way they can’t access anything.…
The main problem discussed in the Harvard case study, “Lehman Brothers: Decline of the Equity Research Department” is the slow demise of Lehman’s Equity Research Department. The department’s painful downfall begins when the equity’s division head Jack Rivkin, a leader who was loved and well-respected among his team, was replaced by Paul William, a fixed-income manager who was unfamiliar and unqualified to deal with equities. To some employees in the department, William’s appointment was a “slap in the face.” Once Lehman gained independence from American Express, pressures to cut costs and downsize became apparent, causing Lehman to lay off thousands of employees within a 5-year timespan. Besides laying off some of the company’s best analysts, of those who were spared, many of them chose to leave the company and joined competing firms. In addition to numerous rounds of lay-offs that Lehman Brothers implemented, a large chunk of funding was cut from the equity research department, which ultimately lowered their performance ranking. Although many attempts to regain traction in equities were made, such as the restructuring of management and rehiring star analysts who had originally left the firm, those attempts seemed to do little to help bring Lehman to where they once were.…
Countrywide Financial was a mortgage-banking firm. They had one of the largest market shares in the early 2000s, when the mortgage market was booming. “No company pursued growth in home loans more aggressively than Countrywide” (NY Times 12/10). They were the leader of their industry, with 500 billion in home loans, 62,000 employees, 900 offices, and $200 billion in assets. Everything had been going well for the company and its employees, until the mortgage crisis began to unfold at the end of 2006. In June 2009, the SEC filed a civil suit against the founder of the business and some of his top management for fraud and insider trading. This came at the height of the mortgage crisis in the US. The founder of Countrywide, Angelo Mozilo, finally agreed to pay $45million in profits and $22.5 million in civil penalties, in which he still admits no wrongdoing.…
The primary issues in this case are: why did the Wall Street bankers blindly trust that the risky mortgages were good assets to invest into? And why did everyone involved allow the whole thing to go this far?…
The report by Examiner Anton R. Valukas identifies what he says are Lehman Brothers’ non-culpable errors of bad judgment and areas where there is “sufficient credible evidence to support a finding by a trier of fact” (for example, a judge or jury). Not exactly a…
What role did Lehman’s executives play in the company’s collapse? Playing on the business money and placing it in a market that was to turn down ward insight of a year (house).…
What role did Lehman’s executives play in the company’s collapse? Were they being responsible and ethical? Discuss.…
Many such scandals broke out during the period of 2000-2002, WorldCom, Tyco International, Adelphia, Peregrine Systems were a few to name. These scandals resulted in many investors losing their money, some who had invested their life savings, due to stock price crashes also causing instability in the stock markets. After a series of analysis and discussions, the senate passed a bill call ‘Sarbanes Oxley Act of 2002’.…
Research a failure that occurred at a large organization such as Tyco, Chrysler/Daimler-Benz, Daewoo, WorldCom, or Enron. In an APA formatted paper that is no longer than 1,050 words, describe how specific organizational behavior theories could have predicted or can explain the failure of the company. Compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure. Lehman Brothers Holdings Inc, the fourth largest US investment bank, succumbed to the sub prime mortgage crisis in the biggest bankruptcy filing in history. The 158 year old firm, which survived railroad bankruptcies of the 1800s, the great depression in the 1930s, & the collapse of long term capital management a decade ago, filed a chapter 11 petition with US bankruptcy caught in Manhattan on September, 15.The following day, its investment banking & trading divisions were acquired by Barclays plc along with its New York headquarters building. In the biggest reshaping of the financial industry since the Great Depression, Wall Street’s most storied firm, Lehman Brothers Holdings Inc., headed towards extinction. The 158 year old firm, which survived railroad bankruptcies of the 1800s, the great depression in the 1930s, & the collapse of long term capital management a decade ago, filed a chapter 11 petition with US bankruptcy caught in Manhattan on September, 15.The following day, its investment banking & trading divisions were acquired by Barclays plc along with its New York headquarters building. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs World Com Inc’s insolvency in 2002 & Drexel Burnham Lambert’s failure in 1990. What happened that weekend was that the Fed got a bunch of bank presidents together and asked them to invest in Lehman (basically loan Lehman money). The bank CEOs, knowing the risk of such a loan (they could see Lehman's finances), refused to do so without some kind of assistance from the…
Bank of America was the first bank to show interest in buying Lehman, however, bank of America had misgiving. First, they wanted to buy Lehman’s stock, but they did not want to buy the toxic assets which Lehman was carrying on its balance sheet. Second, the Federal Reserve would not provide sale support and financial guarantees of Lehman’s toxic assets therefore; bank of…
This is the story of the fall of Lehman Brothers, pieced together over a period of 10 months. It represents some 45 hours of interviews with Peterson and about 30 hours with Glucksman. It also represents extensive interviews with all the members of Lehman's board of directors, with 34 active or former partners, with numerous as-sociates, with employees and people on and around Wall Street. Many internal Leh-man documents and financial records were reviewed. Descriptions of events have been confirmed by participants, including adversaries.…
* September 8, 2008 – Lehman Brothers stock plummets 52% due to fear Lehman cannot raise new capital or find new investors…
History of Lehman Brothers - Lehman Brothers Collection – Baker Library | Bloomberg Center, Historical Collections. (n.d.). Baker Library | Bloomberg Center. Retrieved April 23, 2013, from http://www.library.hbs.edu/hc/lehman/history.html…
Lehman hid over $50 billion in loans by reported that amount in sales. Not only were the CEO and Lehman Brothers executives involved but also the auditing firm Ernst & Young was suspected but not prosecuted because of lack of evidence. The fraud was uncovered when the firm was forced into bankruptcy. This was the largest bankruptcy in US history.…
Greed is the main culprit for Lehman’s demise. The profit-driven bank put its benefits first and creates an egocentric culture which sets the momentum for the entire operation. Top management used Repo 105 to make amendment to the accounting figure. At lower level, decisions were made regardless of tremendous risks involved. The egocentric thinking might have…