Recovering Losses caused by Investment Misconduct

Dodd Calls For Investigation of Lehman Brothers

On Friday, March 19th, Senator Christopher J. Dodd, chairman of the Senate Banking Committee, called on Attorney General Eric H. Holder Jr. to commission a task force to investigate Lehman Brothers for possible accounting manipulation that may have been a cause of the firm's collapse in September of 2008.  Senator Dodd directed the Attorney General to look at Lehman, along with other companies that may have engaged in similar accounting practices, "with a view to prosecution of employees or agents who contributed to any violations of the law."

Senator Dodd's letter was prompted by the report issued by Anton R. Valukas, an examiner appointed by the U.S. Bankruptcy Court, which found, according to Dodd, that Lehman "presented a misleading picture of its financial condition to the public by using extensive repurchase agreements known as Repo 105 transactions."  Repo 105 transactions involve the transfer of assets to another party in exchange for cash, while agreeing to repay the money and take back the assets at a later date.  Dodd noted that the Examiner had found that Lehman "used Repo 105 transactions in a manner that deceived investors and creditors about its true financial state and misleading others."

Senator Dodd, a Democrat from Connecticut who stated last week that he will be introducing legislation to overhaul current federal financial regulations, called on Attorney General Holder to crack down on financial fraud.  "We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets," he set forth in his letter to the Attorney General.  "A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals."