e)How They Got Caught

(e) The person or party that disclosed the scandal (how they got caught?) On the Lehman Brothers case, very smooth fraud action they did it. It is because no one in the company include their investor have been fooled by them. Their tactic to hide over $50 billion in loans which disguised as sales is one trick to obscure points of their investor and their stakeholders.

Lehman’s actions were likely supported by the confirmation

trap. The institution found facts read as loopholes in the accounting guidance that supported its preferred choice shifting debt off the balance sheet and it made that choice. Additionally, it is also likely that the use of euphemistic language (i.e., off-balance sheet vs. deception) in the accounting guidance allowed Lehman to morally disengage and partake in unethical behaviour. But, on September 15, 2008, Lehman Brothers filed for bankruptcy after the U.S. government declined to rescue the firm and after Bank of America decided to merge with Merrill Lynch instead of Lehman Brothers. That’s the way how Lehman Brothers got caught. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman's demise also made it the largest victim, of the U.S. subprime mortgage-induced financial crisis that swept through global financial markets in 2008. Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline. Time has gone, even after bankruptcy the SEC cannot prosecute the Lehman Brothers due to the lack of evidence in the case. If we go through from this case, it have a main culprit which are Lehman executive and their company auditor, Ernst & young who play a role in

this scandal that make Lehman Brothers collapse and going down. So what went wrong? till June 2008 had not reported a quarterly loss even once, had earlier survived many an economic crisis, like railroad bankruptcies of the 1800s, the Great Depression in the 1930s, and the collapse of Long-Term Capital Management in the 1990s. Thus the collapse of the giant investment bank came as a major shock for the entire world markets that plunged after Lehman filed a downfall petition with US Bankruptcy Court in Manhattan. In simple, it’s the reason why Lehman Brothers go bankrupt. First, the giant investment bank succumbed to the sub-prime mortgage crisis that has rocked the United States and the global economy. Lehman was strangled by a massive credit crisis and fast plummeting real estate prices. Hence, the gargantuan $60 billion loss in bad real estate loans forced the bank to file for bankruptcy. However, the fall of the 158-year-year institution that started cotton trade in US before the American Civil War and financed the railroad that built a nation, got hit by a large dose of bad luck, pride, arrogance and greed. Besides, Lehman's collapse was also triggered by the refusal of other banks to do business with it because of its complex and, at times, opaque ways of trading. The housing loans made by the bank to people with little support made these loans very risky, and when interest rates rose, these borrowers could no more repay Lehman. This led to huge losses, the extent of which is not yet clear. Thus other banks stopped trading with Lehman. This led to it losing almost all business and triggered its fall.

Lehman Brothers-The Final Chapter After bankrupt: Defunct investment bank Lehman Brothers moved into its final chapter which the condition after the bankruptcy, but it will take years before the 161-year-old financial firm will close the book on its storied history. Three and a half years after it filed for bankruptcy in New York, Lehman Brothers Holdings emerged from court protection with a plan to redistribute roughly $65 billion to creditors before closing its doors for good. Those doors are housed on a few floors of the Time & Life building in midtown Manhattan, not far from the gleaming Times Square skyscraper that once housed about 9,000 of Lehman Brothers' estimated 25,000 employees. Now, under the supervision of seven new directors, Lehman Brothers' litany of advisers, lawyers and ex-employees will remain busy. There's $10 billion in real estate, $9 billion in private equity investments, $3 billion in corporate loans and $2 billion in derivatives left to sell, as well as several multi-billion legal battles left to fight. Then, Barclays announced its agreement to purchase, subject to regulatory approval, Lehman's North American investment-banking and trading divisions along with its New York headquarters building. Before this, Barclays wanted to buy Leman at discount but Lehman CEO, Fuld decided that his bank worth much more than what had apparently offered then Barclays stepped back. Immediately after Lehman declared bankruptcy, Barclays (BCS) paid $1.3 billion for most of the firm's North American operations. On 20 September 2008, a revised version of that agreement was approved by US Bankruptcy Court Judge James M. Peck. The next week, Nomura Holdings announced that it would acquire Lehman Brothers' franchise in the Asia-Pacific region, including Japan, Hong Kong and Australia, as well as

Lehman Brothers' investment banking and equities businesses in Europe and the Middle East. The deal became effective on 13 October 2008. Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government's decision to let Lehman fail, as compared to its tacit support for Bear Stearns (which was acquired by JPMorgan Chase) in March 2008. Lehman's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America. Whatever Lehman is or was, the tumultuous, ultimately fatally troubled firm has only a finite time left with billions to sell and miles to go before it sleeps

References http://www.businessweek.com/articles/2014-05-22/lehman-brothers-debt-pays-off-for-hedgefunds http://money.cnn.com/2012/03/06/markets/lehman_bankruptcy/ http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.ht ml#