Former Lehman Brothers top brass is lawyering up as the Securities and Exchange Commission strengthens its grasp of potential wrongdoing leading up to the investment bank’s implosion, The Wall Street Journal reports.
White-collar defender Lewis Liman is representing ex-CFO Ian Lowitt. Lowitt replaced Erin Callan in June of 2008. Callan, as well as ex-CEO Dick Fuld and Christopher O’Meara, another former CEO, are under investigation, according to The Journal. The cost of legal defense for the former executives may reach $55 million by October. The company’s outside auditor, Ernst & Young, is also under SEC scrutiny.
At issue, as usual, is the Repo 105 accounting trick wherein a firm masks a short-term loan as an asset sale. Lehman was quite fond of shuffling its assets around right at the time it was due to report quarterly earnings, potentially hiding as much as $50 billion in assets.