Legal News

Former Lehman CEO Dick Fuld: ?What Me Worry??

By Ashby Jones

In the business/financial press — as well as among many lawyers — the takeaway on the report issued by Lehman Brothers bankruptcy examiner Anton Valukas last week seems to be that it was a scathing document, laying out many ways folks at Lehman (and elsewhere) did wrong.

But former Lehman CEO Dick Fuld seems to have read the document differently. According to sources quoted in this story in the NY Post, he’s feeling good about the report — “vindicated” is the word used by the Post. (A call placed by the LB to Fuld’s lawyer, Allen & Overy’s Patricia Hynes, was not immediately returned.)

Some of Valukas’s most provocative findings concern an alleged accounting practice known as “Repo 105,” a maneuver that allowed the bank to move certain assets off its books, thereby flattering the appearance of its balance sheet.

But according to the Post, if this is where regulators and prosecutors are gonna hang their hat, Fuld’s feeling pretty good.

How is this possible? One possible explanation provided by the Post: The Repo 105 moves were conducted after Bear Stearns collapsed and took place while the Federal Reserve and other Wall Street regulators were, in the words of the Post, “inside Lehman monitoring the firm’s activities amid worry of another Wall Street meltdown.” How can you blame Fuld, in other words, for practices that were going on in front of regulators’ noses?

In other Lehman news, the bankruptcy whizzes over at Weil Gotshal filed a reorganization plan for Lehman on Tuesday.

Yes, that’s right, Lehman will be reorganizing and continuing to live, albeit in a vastly altered, zombie-like form. According to this report from AmLaw Daily, the restructuring plan calls for the creation of Lamco, an “asset-management subsidiary carved out of Lehman,” that will effectively lead to the end of Lehman’s stay in Chapter 11. Click here for a copy of the plan, courtesy of the AmLaw Daily.

Under the plan, Lamco will manage a variety of different assets held by Lehman with the goal of selling them off to generate proceeds for Lehman creditors.

Full post as published by Law Blog - WSJ.com on March 17, 2010 (boomark / email).