SEC Could Bring Lehman Case: Former Chief Cox

Tuesday, 20 Apr 2010 02:58 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
A bankruptcy examiner's report showing that Lehman Brothers may have filed misleading financial reports could lead to U.S. Securities and Exchange Commission charges, the former head of the SEC said on Tuesday.

Christopher Cox, who was chairman of the SEC when Lehman declared bankruptcy in September 2008, also said that neither the SEC or the Federal Reserve was aware that Lehman used so-called "Repo 105" transactions to artificially reduce its apparent leverage, as alleged in the report.

"The examiner's report of evidence that Lehman filed misleading financial reports and failed to disclose material accounting information ... may provide the basis for SEC law enforcement action in that case," Cox said in testimony prepared for the U.S. House of Representative's Financial Services Committee.

Cox did not clarify whether he believes the SEC may be able to charge the firm or individuals.

Former Lehman Chief Executive Richard Fuld said in prepared remarks for the same hearing that he only learned of the firm's use of Repo 105, a controversial accounting technique, a year after the investment bank filed for bankruptcy.

The committee is exploring the public policy implications of investment bank Lehman's failure and the findings of the bankruptcy examiner. Cox, whose agency was the primary supervisor for Lehman and other investment banks, did not appear in person, but submitted eight pages of testimony.

He said international bank capital standards at the time were not adequate to protect Lehman and other firms from shocks to the financial system.

Cox said he is concerned new stricter capital and liquidity rules are not yet in place.

"In my view, it remains a matter of the utmost urgency, in particular for commercial bank holding companies, whose ranks now include not only such large and systemically important entities such as Citigroup and Bank of America , but also the nation's largest investment banks," he said.

He also said that in the final days before Lehman filed for bankruptcy, it was still not clear to top government officials and Wall Street executives whether there would be federal support for Lehman.

"The lack of such clarity may have contributed to the demise of Lehman in September 2008," Cox said.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

FBI Takes Wendy Davis Documents But Scope of Probe Unclear

Friday, 18 Apr 2014 16:58 PM

The FBI has control of documents related to Texas State Sen. Wendy Davis' work while she was an attorney for the North T . . .

Tea Party Express Chairwoman Steps Down

Friday, 18 Apr 2014 14:23 PM

Amy Kremer, chairwoman of the Tea Party Express is leaving her post so she can focus on the campaign for Senate Minority . . .

SC Gov. Haley in Double-Digit Lead Over Democratic Challenger

Friday, 18 Apr 2014 14:04 PM

South Carolina Republican Gov. Nikki Haley holds a substantial lead over Democratic challenger Vincent Sheheen in this y . . .

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved