Lehman's $50bn Whistleblower Fired

The Wall Street Journal reports that Lehman Brothers laid-off 14-year firm veteran Matthew Lee in June 2008, claiming he was just part of a right-sizing initiative.

But it seems there may have been more to Lee's dismissal than meets the eye, as earlier that month he apparently alerted the firm's auditor, Ernst & Young (E&Y), to his concerns that Lehman was temporarily transferring some $50bn off its balance sheet. E&Y, which didn't flag the matter up with Lehman's board, said that the firm's management investigated the allegations and found that they were 'unfounded and there were no material issues identified'.

In the meantime, Reuters reports that the UK's Financial Reporting Council has asked E&Y to 'explain' how it audited Lehman's accounts, and it is particularly interested in the off-balance techniques the firm was using.

Finally, The New York Post reports that what's left of Lehman looks like ending up being turned into an asset management business, as the bankrupt firm's restructuring advisor, Alverez & Marsal, intends to establish a new firm, to be called Lamco, which will manage around $45bn in non-cash assets. The firm, which may also manage assets for third party clients, should open for business in May.

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