Senate Banking Committee Chairman Chris Dodd (D-Conn.) on Friday asked Attorney General Eric Holder to investigate allegations of misleading accounting at the failed financial firm Lehman Brothers Holdings Inc. “with a view toward prosecution.”
Lehman’s collapse in September 2008 precipitated the global credit crisis and the subsequent creation of Treasury’s Troubled Asset Relief Program.
Last week Lehman’s court-appointed Chapter 11 examiner, Jenner & Block Chairman Anton Valukas, reported that company executives “painted a misleading picture” of the firm’s finances to help shore up investor confidence. According to Valukas, Lehman used a type of repurchase agreement called Repo 105 that temporarily removed securities from Lehman’s balance sheet, making the company appear healthier than it was.
Dodd in a letter to Holder called for a special task force to investigate the practices.
“We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets,” Dodd wrote. “A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals.”
Valukas was the U.S. Attorney for the Northern District of Illinois from 1985 through 1989. He also served as an Assistant U.S. Attorney from 1970 to 1974), chief of the special prosecutions division in 1974 and First Assistant U.S. Attorney from 1975 to 1976.
Below is the full text of Dodd’s letter:
