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How Lehman Brothers reduced its balance sheet and leverage


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It's really an incredible story and one that will be difficult to defend. The report makes clear that the technical propriety of the sale treatment does not affect the impropriety of non-disclosure. In a fair world, Ernst and Young would face severe penalties, far in excess of what they earned from Lehman since 2001, for their aid.


Also interesting is the fact that no American law firm would sign off on the transactions, so Lehman simply used a British legal team to sign off for Lehman's London division.


From what I have read, and I'm no accountant, no amount to careful reading would have allowed a Lehman investor to pick up on the 105 and 108 transactions. It's just a part of Lehman's downfall, but it speaks to the character of management.

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