Former Lehman exec says flagged Repo 105, was fired

WASHINGTON (BestGrowthStock) – A former executive at Lehman Brothers said on Tuesday that he was suddenly fired in 2008 after raising concerns about the now-bankrupt firm’s accounting practices, including “Repo 105” transactions.

Matthew Lee, a former senior vice president who had been at the firm for 14 years, said his peers shared his concerns about Lehman’s accounting but said management did not respond.

“On multiple occasions, I attempted to bring these issues to the attention of Lehman Brothers’ executive management, and on one occasion to the attention of Lehman’s outside auditors. Within days of first raising issues, I was terminated,” Lee said in testimony prepared for delivery before the House Financial Services Committee.

Former Lehman Chief Executive Richard Fuld is also scheduled to testify. Fuld said in prepared remarks that he only learned of the firm’s use of Repo 105, a controversial accounting technique, a year after the investment bank filed for bankruptcy in September 2008.

Last month a court-appointed examiner said the firm used a technique known as “Repo 105” to temporarily remove some assets from Lehman’s books, obscuring its full financial picture.

Lee said he sent a letter on May 16, 2008, about certain accounting and balance sheet issues that were directly within his scope of responsibility to a group of executives that included former Chief Financial Officer Erin Callan and Christopher O’Meara, who was chief risk officer.

Lee said he later sent a more specific letter about “Repo 105” and other accounting issues to Jack Johnson, a managing director in Lehman corporate compliance.

Six days after his first letter, he was terminated without warning, Lee said.

“Based on what I observed during my employment, I believe that there were serious, material accounting control and corporate governance issues at Lehman,” Lee said.

Stock Market News

(Reporting by Karey Wutkowski; Editing by Andrea Ricci)

Former Lehman exec says flagged Repo 105, was fired