Investigators Pounce On Lehman Brothers

FOX Business News reporter Charles Gasparino said Tuesday that the investigation of Lehman Brothers is picking up nearly two years after its collapse as investigators look into how the firm accounted for its risky assets on its balance sheet.

Former CEO Dick Fuld and top company executives like CFOs Erin Callan and Ian Lowitt are seeing the evidence mount that they used controversial accounting techniques to cover up the situation that Lehman was in before entering bankruptcy.

Nearly a half dozen investigative organizations have shown an interest in the circumstance surrounding Lehman's collapse Gasparino learned, including U.S. Attorney’s office from the Southern and Eastern District of New York, the Federal Bureau of Investigation, the New Jersey Bureau of Securities and the Securities and Exchange Commission.

The investigation was intensified recently after the court-appointed bankruptcy examiner Anton Valukas issued his report saying that the firm and its top executives were "grossly negligent" in hiding its financial situation before its fall.

Lehman has been accused of using improper accounting techniques, known as Repo 105 which has specifically caught the attention of investigators, as it can temporarily lower the amount of borrowing a firm uses to operate. The technique is not necessarily against the law.

The investigators are also looking into how the firm marked to market the dropping value of investments and if the losses from an alleged stock fraud scheme were properly booked.

Additionally, Gasparino notes that investigators are also looking at Lehman's trading with a number of hedge funds that it controlled or had a stake in, and the use of off-balance sheet companies that traded with the firm in the final months before its bankruptcy.