Let Lehman justification be done open Anton Valukas urges court

Christine Seib and Alex Spence & , : {}

The author of a scathing report into the collapse of Lehman Brothers called yesterday for every piece of evidence he had uncovered to be made public so that the investment banks creditors could bring legal action if they wished.

Anton Valukas, an examiner appointed by the US Bankruptcy Court, wants to release several thousand documents behind his 2,200-page report, which is expected to be used by creditors seeking evidence of wrongdoing by those involved in Lehmans failure.

The report revealed that Lehman had used an accounting ploy to move $50 billion off its balance sheet in time for its quarterly results. It also said that a private auction of the banks derivatives book had resulted in a $1.2 billion loss.

CME Group, the worlds biggest futures and options exchange, which conducted the $2 billion auction, provided evidence to Mr Valukas for his report but has asked that the identity of the six bidders be redacted before it is made public. Mr Valukas found no evidence of wrongdoing by CME.

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In a filing to the court, lawyers for the examiner said that the public had a right to know the identity of bidders that resulted in a highly favourable gain for the winners.

Barclays Bank and the Office of Thift Supervision have also raised informal complaints about some information that Mr Valukas planned to reveal.

In his report, Mr Valukas found that litigants had a chance of proving claims of breach of fiduciary duty against several of Lehmans senior executives and of professional malpractice against Ernst & Young. E&Y was the banks auditor while Lehman was using an accounting tactic called Repo105 to reduce the leverage on its balance sheet.

In Britain, E&Y issued a statement this week saying that it was confident we will prevail should any of the potential claims identified against us be pursued ... Lehmans bankruptcy was the result of a series of unprecedented adverse events in the financial markets ... It was not caused by accounting issues or disclosure issues.