Associated Press reports that a federal jury in California last week found that Lehman Brothers knowingly helped an aggressive home equity lender, despite the fact that the firm had been warned about the lendor's questionable business practices.
7,500 homeowners joined together and filed suit against First Alliance Corporation, a company that ceased trading after filing for bankruptcy in 2000. The jury found that First Alliance defrauded the homeowners and that Lehman assisted in the perpetration of the fraud. The plaintiffs were awarded $50.9m in damages, with Lehman having to pick up 10% of the tab.
A spokesman for the firm said that Lehman was 'disappointed with the jury's findings on the question of liability. We continue to believe that no one at Lehman Brothers was aware of any wrongdoing that may have been committed by individual loan officers at First Alliance'.
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