Lehman and Dick Fulf Face 3 Grand Jury Investigations

Discussion in 'Wall St. News' started by ByLoSellHi, Oct 17, 2008.

  1. This is 'new' news, in addition to that announced this morning.

    Things are moving quickly. Not good for Tricky Dicky Fuld.

    Congress wants its pound of flesh, baby.


    Lehman Is Focus of Three U.S. Grand Jury Probes; 12 Subpoenas

    By Linda Sandler and Christopher Scinta

    Oct. 17 (Bloomberg) --
    Lehman Brothers Holdings Inc., which last month filed the largest bankruptcy in history, is the subject of three federal criminal probes and at least 12 subpoenas, according to a lawyer for the failed bank.

    ``We are facing three grand jury investigations,'' said lead Lehman bankruptcy lawyer Harvey Miller yesterday in Manhattan federal court. The probes, launched by the New York U.S. attorneys in Brooklyn and Manhattan as well as in Newark, New Jersey, are focusing in part on Lehman's role in the $330 billion auction rate securities market and possible crimes associated with the New York-based bank's $6 billion June stock issue, according to a person familiar with the case.

    The New York Post reported today that Lehman Chief Executive Officer Richard Fuld is among the 12 subpoenaed, without saying where it got the information. Miller declined to immediately comment on whether Fuld was among those subpoenaed.

    Investigators have subpoenaed Ernst & Young LLP, Lehman's auditor; U.K.-based bank Barclays Plc, which bought Lehman's North American brokerage; and the New Jersey Division of Investments, which runs a pension fund that lost $115.6 million on a $180 million investment in the June stock sale, according to people familiar with the case. It's not clear whether these subpoenas are part of the 12 noted by Miller.

    Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in Manhattan, declined to comment. Fuld's lawyer, Patricia Hynes of London-based Allen & Overy, didn't immediately return a call or e-mail seeking comment.

    Filed For Bankruptcy

    Lehman sought bankruptcy protection on Sept. 15 with debt of $613 billion. Its demise helped accelerate a global credit crisis that wiped out $30 trillion of equity value in the past year.

    Triggered by bankruptcies or stock losses linked to the financial collapse, the U.S. has begun investigations of mortgage lending, securitization and failed banks including Lehman. Nationally, the FBI is looking into 26 firms, including American International Group Inc., a senior law-enforcement official said.

    Garcia, along with Brooklyn U.S. Attorney Benton Campbell, and Newark, New Jersey U.S. Attorney Christopher Christie, have increased their resources to prepare for possible prosecutions associated with the credit crisis and subsequent bank failures.

    Christie has subpoenaed documents to determine whether Lehman failed to fully disclose its eroding financial condition at the time of the $6 billion stock offering, according to people familiar with the matter.

    Opened Inquiries

    Campbell has opened inquiries into whether Lehman executives misled investors about the firm's financial health and whether Zurich-based UBS AG lied to investors about securities backed by subprime mortgages, according to a person familiar with the case.

    Also subpoenaed by federal prosecutors were Putnam Investments LLC, the Boston-based mutual fund firm that oversees about $163 billion and bought Lehman bonds and shares; New York- based fund manager BlackRock Inc., a Lehman creditor; AIG, once the world's largest insurer; and C.V. Starr & Co., which is run by ex-AIG CEO Maurice Greenberg, according to the people.

    The grand jury probes follow not only the implosion of Lehman, but the collapse of Bear Stearns Cos. earlier this year, the U.S. government takeover of Fannie Mae and Freddie Mac and the rescue of New York-based AIG.

    On the issue of auction rate securities, the grand juries may be exploring whether Lehman misled investors about the viability of the securities. The market collapsed in February after demand for the debt dried up. Banks paid to manage bidding on the debt abandoned the market and stopped acting as buyers of last resort. That caused rates to rise to as high as 20 percent.

    Credit Suisse

    Last month, Brooklyn prosecutors charged two former Credit Suisse Group Inc. traders with fraudulently selling corporate clients more than $1 billion of auction-rate securities linked to subprime mortgages, which they claimed were backed by U.S. guaranteed student loans.

    Interest rates on auction-rate debt are set through periodic bidding. When there aren't enough prospective purchasers, the securities reset based on a formula or revert to a rate specified at the time the securities were initially sold.

    The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
  2. Grand Juries. Ah, the simple mention of 21 John and Jane Does hearing a Federal Prosecutor explain the dealings of people stea........uh, I mean earning 40,000,000 a year and how it violates Federal statutes, and how it brought down the economy makes shivers run up and down my spine.

    Speaking of spines.........don't you think for a second these spineless motherfuckers won't spill the goods in the hopes of cutting a deal.

    This is where the hedgies go down huge. Now, you'll see an open komona, the naked shorting, failed longs, Dubai trades. Now, my friends, and enemies, it's time to dance.............backwards.
  3. W4rl0ck


    What about BSC, et. al.?

    Don't want them to feel left out. :D
  4. Lehman was not built on naked shorting, failed longs and Dubai trades. If they had a couple hundred thousand employees over the years (maybe millions) and hundreds of thousand investors and ditto on other firms they did business with, you think ONE person would have noticed.

    Actually, from what I gather, the only people who write about these issues, Bobo patch etc have absolutley never worked anywhere credible on the street where they could ever know what is going on inside. Plus they have zip for background in finance.
  5. Actually, Patch is one of the most detailed and thorough forensic guys I've ever met. And he's an aircraft engineer. Patrick has hired some of the most detailed analysts out there. I don't know why you always fight me on this. Everything on Deepcapture is researched to the 't'. Only thing you don't see is what they turn over to the law. It is a phenomenally dedicated team. One of the best works for them for a pittance of his usual fee because of the nature of the work.

    But you keep believing what you want to believe. And you're wrong about LEH too.
  6. I don't know why you always fight me on this.

    I don't know either, I hope you're not mad. :D
  7. Fuld publicly stated he could prove BSC was targeted and attacked, knowing he was next. Only place he could have gotten that info was his own trading desk.

    The two are intertwined. At his minute, the Feds are looking at who knocked BSC and Leh out, and who did one did the other. You don't kill Bear, then back off Lehman because you made too much money. Problem is, the taxpayers are a little pissed off, and when you killed Lehman, you created bad bad things, like whats' coming Tuesday. And you went too far, and this time, even the SEC can't protect you.

    This is Armageddon for the Street. I just hope the trading business survives; but there are no guarantees. Depends on what happens after the first. If this continues to implode, they'll come after us too.
  8. I don't want to boil this down to too simplistic a message, but:

    Watch the cornhole, Dick - [​IMG]
  9. W4rl0ck


    You heard anything about the "primary dealers" using their new Fed money to attack hedge funds positions that are coming to them for liquidity? It just never ends.

  10. No, but for you, I"ll make some inquiries.

    Lots of stuff happening right now. So stay tuned. Last weekend should have been a barnburner, but it was slow. So watch out. With that late selloff today, something's a burnin'.

    Maybe somebody can't come up with Tuesdays' cash. And no, it won't ever end. When you see the depth of the fillth and corruption by the so called 'elite', you'll understand what I know. There is no end. Basic human nature, you know.

    And while we're on the subject. Let's talk about Political parties. Many people who know me, and thought I was crazy, now think I know a little bit. And they go , BUSH!!! Republicans. And it's not that. Two big players are Schumer and Dodd. Democrats. And they need to puke it up. but think about it. Dodd/Ct/ HF home. Schumer/NYC/Wall St. If those States were Republican, I'd give you two republican names.

    So, let's call it what it is. Flawed Characters.

    OH, and Tim Mahoney? The Florida Congressman? I don't care how many broads he was boning. Couldnt' care less. But he did it as a Congressman, and if he used my money, my time, my factlities, hang him.

    Know what he did before he became the Champion of Moral Fiber? He was the CFO of V Finance. V Finance. They did more Pipes than Joe the Plumber.

    Nope. Never ends.
    #10     Oct 17, 2008