As its former CEO Dick Fuld gets ready to testify before the Financial Crisis Inquiry Commission later today, the estate of historic Wall Street failure Lehman Brothers is enlisting a team of lawyers to unearth a potential conspiracy that would have accelerated the investment bank’s September 2008 demise.
The New York Times reports that Lehman lawyers have “demanded trading records, e-mail and other correspondence for all of 2008” from a gallery of supposed Wall Street nasties that includes Goldman Sachs (GS) (not too far removed from its $550 million SEC settlement), SAC Capital Advisors (of the Connecticut Republican conspiracy) and noted Lehman short-seller Greenlight Capital.
At issue are so-called “bear raids,” wherein short-sellers collude to drive down the price of a stock and profit from the downward move. At stake, potentially, are billions of dollars in damages. Some Wall Street observers have suggested that bear raids played an important role in the decline of both Bear Stearns and Lehman Brothers during the 2008 credit crisis, but not everyone thinks avaricious hedge funds did Lehman in.
“You think these six guys brought down this firm? They didn’t. Incompetence brought Lehman down,” hedge fund manager Bill Fleckenstein told the Times. Let’s just say there’s some evidence to support Fleckenstein’s theory.
