" The code also states when communicating investment information care must be taken to ensure that it is fair, accurate and complete as well as make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer.
Evidence indicates Lehman's senior financial executives knew of the Repo 105 transactions and certified the accuracy of Lehman's financial statements and disclosures despite having full knowledge that the company had engaged in the use of these transactions to hide their toxic assets and make their financial statements appear to be in good health when, in reality, they were not. These executives were fully aware that the financial statements were misleading and did not fairly present the true position of the company.
Hiding toxic assets and releasing favorable financial statements to investors each quarter clearly was intended to deceive investors and the public in general. This practice showed a favorable and healthy Lehman Brothers when in fact this was not the case. This action clearly misrepresented the financial position of Lehman and resulted in an inflation of the market price of the firm's securities.
Additionally, the Lehman executives received compensation that was based on the favorable financial statements produced by the company. Many of these senior executives benefited greatly by receiving huge compensation, bonuses, and stock grants (Jeffers). Information was manipulated by Lehman's executives in their own favor and for their personal benefit to the detriment of their investors and other principals. Lehmann's accounting practices constituted a conflict of interest and a serious breach of ethical conduct.
In June of 1012 the Accountability and Actuarial Board (AADB) concluded that no action should be taken against accountant Ernst and Young (E & Y) or any individuals in connection...
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