DealZone

Sales and subpoenas for Lehman

October 17, 2008

fuld3.jpgAn auction of Lehman‘s Neuberger Berman unit and other investment management bits and pieces moved closer yesterday with bid procedures getting clearance from a New York judge.
 
Private equity groups Bain Capital and Hellman & Friedman agreed last month to purchase Lehman’s prized asset management unit for $2.15 billion, and they will be the lead bidders at an auction for the unit in December.
 
In a status update prior to the judge’s ruling, Lehman’s lead attorney, Harvey Miller, said prosecutors had opened three grand jury investigations into the investment bank’s demise. The New York Post reported that disgraced CEO Dick Fuld is among 12 Lehman executives being subpoenaed. Fuld, questioned by a U.S. congressional panel earlier this month, denied deceiving shareholders.
 
Politicians and the public are calling for heads to roll on Wall Street. Looking into Lehman are federal prosecutors as well as at least one state attorney general. And the FBI is in the early stages of examining mortgage finance companies Fannie Mae and Freddie Mac and insurer American International Group, which were bailed out by the government after getting caught in the credit crunch.
 
Did anyone actually understand the rocket science behind the engineering of the credit default swaps and other complex financial tools that blew up behind the scenes? If not, then it might be a hard sell to convince anyone that investors were intentionally misled.

In the brave new financial world that emerges from the chaos of the ’08 crash, will Wall Street executives be expected to understand everything their firms are doing? Sounds reasonable, if unlikely.

Deals of the day:

* The credit crisis has forced Dutch builder Royal BAM Groep to put on hold its plan to sell its 21.5 percent stake in Dutch dredger Van Oord, BAM said.

* Japanese trading house Itochu Corp and six Asian steelmakers have agreed to jointly buy a minority stake in Namisa, an iron ore mine owned by Brazilian steelmaker CSN, sources familiar with the deal told Reuters. 

* San Miguel may bring in foreign partners in a bid for a 40 percent stake the Philippines is selling in oil refiner Petron Corp, the president of Southeast Asia’s largest food and beverage firm said.

* India’s Tata Sons has been in talks to buy a stake in AIA, a major Asian unit of American International Group, according to sources close to the matter, as the U.S. insurance giant seeks to sell assets after nearly collapsing last month.

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Did anyone actually understand the rocket science behind the engineering of the credit default swaps and other complex financial tools that blew up behind the scenes? If not, then it might be a hard sell to convince anyone that investors were intentionally misled.

Answer: YES, anyone with 5th grade math should have.
Those CEO’s knew, the only thing they didn’t know is the time period. None of this could have happened without the collusion of the RATING AGENCIES. I’d say those agencies are more guilty in assigning a AA+ & A+ rating to junk.
The rating agencies were derelict in their duty, and they should suffer the consequences rather than the investor who counted on them in the decision to buy.

Posted by ddavid | Report as abusive
 

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