U.S. Securities and Exchange Commission investigators have concluded their probe of possible financial fraud at Lehman Brothers Holdings Inc. without recommending enforcement action against the firm or its former executives, according to an excerpt of an internal agency memo.


Pressure on the agency to punish any wrongdoing related to Lehman's collapse escalated after Anton Valukas, the court- appointed bankruptcy examiner, found the firm misled investors with "accounting gimmicks" that disguised its leverage.

In case you are wondering, the "gimmicks", called "repo 105s", were not illegal then. But they are now. So Lehman is in the clear!

[Insert rant on doing unethical/fraudulent things that are nevertheless WITHIN the letter of the law and quasi-official standards]. This is why we need a real civil equity system of justice in the business world, not a Kafkaesque rules-based one.

In its final year, Lehman overvalued real-estate holdings, including a stake in U.S. apartment developer Archstone-Smith Trust, Valukas said. Lehman and Tishman Speyer Properties LP completed a joint acquisition of Archstone for $22 billion, including debt, in October 2007.

Lehman presented "unreasonable" valuations of its Archstone stake in the first three quarters of 2008, overvaluing the holding by as much as $450 million in the second quarter, Valukas said.

Lehman agreed to buy the rest of Archstone for almost $1.6 billion from Bank of America Corp. and Barclays Plc, ending a dispute with the banks over the price, a person familiar with the deal said. Lehman had been trying to stop the lenders from concluding an option to sell to Sam Zell's Equity Residential.

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