Lehman Brothers’ Perfect Storm: Where Ethical Lapses Met Bad Judgment
Former CEO Richard Fuld and 12 other Lehman executives and directors, accused in investor lawsuits of lying about Lehman’s financial condition leading up to the bankruptcy, filed in Federal Bankruptcy Court yesterday requesting a judge release insurance proceeds to pay for settlements. The former executives have agreed to pay $90 million to settle a shareholder suit and $8.25 million in another suit. They are neither admitting or denying wrongdoing.
Update: April 20, 2010 : Today former Lehman CEO Richard Fuld testified before the U.S. House Financial Services Committee continuing to insist he had no recollection whatsoever of hearing anything about Repo 105 transactions while at Lehman. Fuld testified Bankruptcy Court Examiner Anton Valukas distorted relevant facts about Repo 105, and that he signed off on SEC filings because his chief legal officer and others raised no issues. Rep. Jackie Speier (D- CA) disagreed with Fuld that the Examiner’s report vindicated him, saying that billions of Lehman shares had traded on misrepresetation.
Did Wall Street’s financial meltdown really have nothing to do with ethics or governance? Was it instead about bad business decisions and poor government oversight? That is what some business leaders, in a series of 30 interviews I recently conducted, have suggested.
I disagree. And I think the Bankruptcy Court Examiner’s report on the collapse of Lehman Brothers, released last week, backs me up.
It offers a prime example of how ethics and governance are part of the lens that should be focused on in what went wrong in the meltdown; indeed, ethics and governance are what we need to have more, not less, of as we re-establish the soundness of our economy.
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
Update: April 20, 2010 : Today former Lehman CEO Richard Fuld testified before the U.S. House Financial Services Committee continuing to insist he had no recollection whatsoever of hearing anything about Repo 105 transactions while at Lehman. Fuld testified Bankruptcy Court Examiner Anton Valukas distorted relevant facts about Repo 105, and that he signed off on SEC filings because his chief legal officer and others raised no issues. Rep. Jackie Speier (D- CA) disagreed with Fuld that the Examiner’s report vindicated him, saying that billions of Lehman shares had traded on misrepresetation.
Did Wall Street’s financial meltdown really have nothing to do with ethics or governance? Was it instead about bad business decisions and poor government oversight? That is what some business leaders, in a series of 30 interviews I recently conducted, have suggested.
I disagree. And I think the Bankruptcy Court Examiner’s report on the collapse of Lehman Brothers, released last week, backs me up.
It offers a prime example of how ethics and governance are part of the lens that should be focused on in what went wrong in the meltdown; indeed, ethics and governance are what we need to have more, not less, of as we re-establish the soundness of our economy.
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