Lehman Brothers accused of using front company

New allegations of accounting trickery by collapsed US bank Lehman Brothers have emerged after the New York Times newspaper claimed the firm used a front company to conceal billions of dollars in toxic assets.

The newspaper claims company Hudson Castle played a behind-the-scenes role in helping Lehman manipulate its finances. The newspaper claims the business was staffed by ex-Lehman employees and was effectively controlled by Lehmans.

While the use of company arrangements are not uncommon, the paper said shareholders were entitled to more transparency about the relationship.

The newspaper quotes a spokesman, on behalf of Hudson, which still operates, who said the relationship with Lehman all but ended in 2004. “All funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way”.

Read the full story: Lehman Channeled Risks Through ‘Alter Ego’ Firm

Further reading: Lehman administrators consider damning report