Senator seeks criminal probe into Lehman crash

A senior US senator urged Attorney-General Eric Holder to create a task force to investigate possible criminal conduct behind the collapse of Wall Street giant Lehman Brothers.

“I am deeply concerned about the facts that have come to light regarding the demise of Lehman Brothers and the accounting manipulation that contributed to it,” Senate Banking Committee Chairman Chris Dodd wrote in a letter to Holder.

“I respectfully ask you to commission a task force to investigate the Lehman situation as well as other companies that may have engaged in similar accounting manipulation with a view to prosecution of employees or agents who contributed to any violations of the law.”

Lehman collapsed in September 2008 in the largest bankruptcy in history, triggering a financial shockwave that dragged the global economy into a painful recession that has left US unemployment stubbornly near 10 per cent.
Dodd pointed to a scathing 2,200-page report from court-appointed expert Anton Valukas who blamed the bank’s collapse on top executives as well as audit firm Ernst & Young and banks Citigroup and JPMorgan Chase.

Valukas accused senior management of “actionable balance sheet manipulation” and said they oversaw and certified decisions that exacerbated Lehman Brothers’ woes.

Dodd, who represents Connecticut, is the key author of legislation in the US Senate aimed at preventing another global financial collapse.
“We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets. A task force investigation and taking appropriate federal actions in these matters will contribute to these goals,” he wrote.

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