Tuesday, May 19, 2009

Lehman Seeks Probe Into Sale to Barclays

Lehman Brothers Holdings wants to investigate whether the sale of its US brokerage unit to Barclays Capital was undervalued, resulting in a “windfall” to the British bank of possibly billions of dollars.

In a court filing Monday, lawyers for Lehman Brothers Holdings said they have become aware of “apparent material discrepancies” relating to Barclays’ obligation to pay employee bonuses and cure amounts, which affected the sale price, and asset transfers related to repurchase agreements conducted during the week that the sale was negotiated.

“In the aggregate, these apparent discrepancies may have resulted in a windfall to Barclays at the expense of the estate, its creditors and other parties of interest, in an amount that could reach into the billions of dollars,” the court documents say.

A US bankruptcy court approved the sale of Lehman’s US brokerage business to Barclays last September less than one week after it was unveiled in the middle of the financial crisis.

The entire forced sales, liquidations and takeovers during the financial crisis need to be looked into. With news of this Lehman Brothers probe, it is clear that a Congressional investigation needs to begin that will look into the sales of Bear Stearns and Washington Mutual to JPMorgan Chase at what appear to be unusually favorable terms for JPMorgan, the collapse of Lehman, which resulted in the money management end of Lehman's business, Neurberger Berman ending up in the hands of George Bush's second cousin Herbert Walker IV (a former Goldman managing partner), and the attempted sale of Wachovia to Citigroup for pennies on the dollar.

1 comment:

  1. Any valuation sbe market driven. Given what would have been the virtual collapse of the big banks had there not been such excessive state intervention last year how could Lehman's proove that this division was undervalued? Am I being too simplistic here?