3. Lehman brothers was a global financial services firm. It was founded in 1850. It was
doing business in investment banking, investment management. The firm was the 4th
largest investment bank in the united states.
They had headquarters in New York City.
17. Hid over $50
billion in loans by
showing them as
sales at the end of
each quarter
What was scandal ?
18. The trick made Lehman Brothers
look much healthier — on paper,
at least. These guys were
desperate to fool investors and
credit rating agencies. They had
screwed up on a truly colossal
scale, and lined their pockets all
the while.
Reason for the scam
19. How they did it
They was able to
manipulate the books by
using “Repo 105”.
Repo (repurchase options)105:-An accounting trick in which a
company classifies a short-term loan as a sale and subsequently uses the
cash proceeds from said sale to reduce its liabilities.
21. Who was involved?
Chief Financial Officer (CFO)Erin Callan
Auditor, Ernst & Young
Chief Executive Officer (CEO)Richard Fuld
22.
23. 1. This was the
largest bankruptcy
in the entire
world, so basically
everyone got
affected
24. 3. Cost of borrowings also
increased
2. Less profits of U.S based
companies
25. 6. millions of investors lost all or
almost all of their money
4. Almost 6 million jobs were lost all over world
5. Unemployment rate almost doubling to
10 %
26. 7. Reduced global market value by $10
trillion in market capitalisation
8. Intensified the downturn that
started in late 2007 created from
the sub prime mortgage
29. Action taken against Lehman
brothers 1. The Lehman brothers are
still under investigation and
analysis
2. No action have been taken
against the Lehman brother
as of today due to lack of
evidence
30. Action taken against Ernst &
young
1. Ernst &young was sued by New York supreme
court because they are believed to be responsible for
hiding the Lehman brothers’
2. Ernst & young was sued for a some of about
150million dollars for helping the Lehman brothers.
3. On 15 April 2015 the attorney general said that the
Ernst $ young will pay 10 million dollars .
31. 1. On September 20 ,2008 the Barclays acquired most of Lehman's
north America operation for 1.3 billion dollars.
2. Nomura holdings Japan's top brokerage firm agree to buy Asia
divisions of Lehman brother for 225 millions.
3. The Lehman Brothers are still a corporation today with roughly 300
employees and is trying to pay off its debt
4. As of January 2016, Lehman brother already pay 105 billions dollar
to his unsecured creditor
What happened to the Lehman Brothers
37. How to avoid
1. Screen applicants thoroughly before hiring them.
2. Implement internal controls to reduce fraud risk.
3. Comparative financial statement must be used
4. Consider annual audits
5. Financial statement check