PracticeAuditLehman Brothers accused of using front company

Lehman Brothers accused of using front company

NYT said shareholders should have known about company arrangement

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

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