Now in Legal Rebels:
Posted Apr 23, 2012 09:38 pm CDT
Hired to determine what happened at Lehman Brothers that put the longtime private bank into a September 2008 bankruptcy that threatened the U.S. economy, chairman Anton R. Valukas of Jenner & Block found that there was enough evidence of wrongdoing to justify a criminal case.
But the Securities and Exchange Commission has not pursued one, 60 Minutes reported Sunday, despite what Valukas described as a “shell game” of back-and-forth international transfers intended to make its finances look far more substantial than they were.
Asked by interviewer Steve Kroft if he was upset about the lack of prosecution in the case, Valukas said that wasn’t his job: “My job was to set out the facts, lay it out,” he told Kroft. “They have to make their own prosecutive decisions.”
One thing that would make a prosecution more difficult, Valukas noted, is the fact that the SEC and the Federal Reserve had officials on site at Lehman Brothers working there daily during the last six months or so of the company’s existence. So, to the extent that Lehman Brothers fell short on its disclosure obligations concerning its precarious financial position, one has to wonder why the federal regulatory agencies in charge of compliance didn’t step into the breach.
“The very fact that government regulators were inside the company with access to its books and records would complicate any prosecution of Lehman officials,” Valukas told 60 Minutes.
He speculates that the reason the feds didn’t do so may be that they lacked the expertise to grasp what they were seeing. “They were getting the material,” Valukas said. “Whether they understood it is another question.”
ABAJournal.com: “Jenner & Block Used ‘Stupid’ Search in Sorting Through Lehman E-Mails”