Lehman Brothers Holdings Inc. (formerly ticker symbol NYSE LEH ) is a global financial services company. Prior to filing for bankruptcy in 2008, Lehman was the fourth largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch), doing business in investment banking, equities and sales of fixed income and trade (mainly US Treasury securities) research, investment management, private equity, and private banking. Lehman operates for 158 years since its inception in 1850 to 2008.
On September 15, 2008, the company filed for Chapter 11 bankruptcy protection after a massive exodus of most of its clients, drastic losses in its shares, and asset devaluation by credit rating agencies, largely triggered by Lehman's involvement in the subprime mortgage crisis, and its exposure to the assets less liquid. Lehman's bankruptcy filing is the largest in US history, and is thought to have played a major role in the unfolding of the global financial crisis of the late 2000s. Market collapse also lends support to the doctrine of Too Big To Fail.
After filing for bankruptcy, global markets dropped immediately. The next day, Barclays announced its approval to buy, subject to regulatory approval, Lehman North American investment-banking and trade division along with its headquarters in New York. On September 20, 2008, a revised version of the agreement was approved by US Bankruptcy Judge James M. Peck. The following week, Nomura Holdings announced that it would acquire Lehman Brothers franchise in the Asia-Pacific region, including Japan, Hong Kong and Australia, as well as Lehman Brothers' banking and investment equity businesses in Europe and the Middle East. The agreement was effective on October 13, 2008.
Video Lehman Brothers
History
Under the Lehman family (1850-1969)
In 1844, Henry Lehman, 23, the son of a Jewish cattle trader, immigrated to the United States from Rimpar, Bavaria. He settled in Montgomery, Alabama, where he opened a dry goods store, "H. Lehman". In 1847, after the arrival of his brother Emanuel Lehman, the bureau became "H. Lehman and Bro." With the arrival of their younger brother, Mayer Lehman, in 1850, the company was renamed again and "Lehman Brothers" was founded.
During the 1850s, cotton was one of the most important crops in the United States. Utilizing the high cotton market value, the three brothers began to routinely receive raw cotton from customers as payment for merchandise, which ultimately started a second business trade with cotton. Within a few years, this business grew to be the most important part of their operations. After Henry's death from yellow fever in 1855, the remaining brothers continued to focus on their commodity trading/brokerage operations.
The Lehmans were also involved in the Atlantic slave trade in the 1850s.
In 1858, the cotton trading center had shifted from the South to New York City, where factor and commission houses were based. Lehman opened his first branch office at 119 Liberty Street, and Emanuel, 32, moved there to run the office. In 1862, facing difficulties caused by the Civil War, the company collaborated with a cotton merchant named John Durr to form Lehman, Durr & amp; Co After the war, the company helped finance Alabama's reconstruction. The company's headquarters eventually moved to New York City, where it helped locate the New York Cotton Exchange in 1870; Emanuel sat on the board of governors until 1884. The company also tackled emerging markets for rail bonds and entered the business of financial advisers.
Lehman became a member of Coffee Exchange as early as 1883 and finally the New York Stock Exchange in 1887. In 1899, the company secured its first public offering, the preferred and common stock of the International Steam Pump Company.
Despite offering Steam International, the true turnover of the company from home commodities to residential homes did not begin until 1906. That year, under Emanuel Philip Lehman's son, the company partnered with Goldman, Sachs & Co., to bring General Cigar Co. to the market, followed by Sears, Roebuck and Company. Over the next two decades, nearly a hundred new problems were borne by Lehman, several times with Goldman, Sachs. Among these are F.W. Woolworth Company, May Department Stores Company, Gimbel Brothers, Inc., R.H. Mac & amp; The Company, The Studebaker Corporation, B.F. Goodrich Co. and Endicott Johnson Corporation.
After Philip Lehman retired in 1925, his son Robert "Bobbie" Lehman took over as head of the company. During Bobbie's tenure, the company passed the Great Depression capital crisis by focusing on venture capital while the equity market recovered.
Traditionally the family partnership only, in 1924, John M. Hancock became the first non-family member to join the firm, followed by Monroe C. Gutman and Paul Mazur in 1927. In 1928, the firm moved to one of the William now famous. Road location.
In 1930, Lehman underwrote the initial public offering of the first television manufacturer, DuMont, and helped fund Radio Corporation of America (RCA). It also helps finance the rapidly growing oil industry, including the Halliburton and Kerr-McGee companies. In the 1950s, Lehman underwrote the IPO of Digital Equipment Corporation. Then, set up Digital acquisition by Compaq.
A growing partnership (1969-1984)
Robert Lehman died in 1969 after 44 years as a corporate patriarch, so no Lehman family members were actively involved with the partnership. Robert's death, coupled with the absence of a clear successor from the Lehman family, left a void in the company. At the same time, Lehman faced strong challenges in the midst of a difficult economic environment in the early 1970s. In 1972, the company faced tough times and in 1973, Pete Peterson, chairman and chief executive officer of Bell & amp; Howell Corporation, brought in to save the company.
Under Peterson's leadership as chairman and CEO, the company acquired Abraham & Co. in 1975, and two years later joined His Majesty, but fought, Kuhn, Loeb & Co., to form Lehman Brothers, Kuhn, Loeb Inc., the nation's fourth largest investment bank, behind Salomon Brothers, Goldman Sachs and First Boston. Peterson led the company from a significant operational loss of up to five consecutive years of record profit with a return on equity among the highest in the investment banking industry.
In the early 1980s, hostility between bankers and corporate investment traders (which encouraged most of the company's earnings) encouraged Peterson to promote Lewis Glucksman, company president, COO and former trader, to co-CEO in May 1983. Glucksman introduced a number of changes has the effect of increasing tension, which when combined with Glucksman's management style and decline in the market, resulted in a power struggle that toppled Peterson and left Glucksman as the sole CEO.
Bankers who get annoyed are getting worse because the power struggles leave the company. Stephen A. Schwarzman, chairman of the corporate committee M & amp; A, recalled in a February 2003 interview with Private Equity International that "Lehman Brothers has a highly competitive internal environment, which eventually becomes non-functional." The company suffered under disintegration, and Glucksman pressed to sell the company.
Merger with American Express (1984-1994)
Shearson/American Express, a brokerage-owned American Express-owned brokerage firm rather than investment banking, acquired Lehman in 1984, for $ 360 million. On May 11, the combined company became Shearson Lehman/American Express. In 1988, Shearson Lehman/American Express and E.F. Hutton & amp; Co. joined Shearson Lehman Hutton Inc.
From 1983 to 1990, Peter A. Cohen was CEO and chairman of Shearson Lehman Brothers, where he led the purchase of a billion US dollars from E.F. Hutton to form Shearson Lehman Hutton. During this period, Shearson Lehman was aggressive in building his financial business in rival model Drexel Burnham Lambert. In 1989, Shearson supported the management team of F. Ross Johnson in an effort to purchase RJR Nabisco management but was eventually defeated by private equity firm Kohlberg Kravis Roberts, backed by Drexel. Divestment and independence (1994-2008)
In 1993, under the newly appointed CEO, Harvey Golub, American Express began to break away from banking and brokerage operations. The company sold its brokerage and asset management operations to Primerica and in 1994 the company released Lehman Brothers Kuhn Loeb in an initial public offering, such as Lehman Brothers Holdings, Inc.
Despite rumors that it would be retrieved again, Lehman performed quite well under chairman and CEO Richard S. Fuld, Jr. In 2008, Fuld has worked in the company for 30 years, and will become CEO with the longest term on Wall Street. Fuld had directed Lehman through the 1997 Asian Financial Crisis, a period in which the company's share price fell to $ 22 USD in 1998, but it is said to have underestimated the decline in the US housing market and its effect on Lehman's mortgage-backed mortgage business. Fuld continued his work as a subprime mortgage crisis holding, while rival CEOs like Bear Stearns, Merrill Lynch, and Citigroup were forced to resign. In addition, Lehman's board of directors, including retired CEOs such as Christopher Gent of Vodafone and John Akers of IBM, are reluctant to challenge Fuld as the company's stock price falls lower.
Fuld has a succession of "number two" below him, usually referred to as president and chief operating officer. Chris Pettit was Fuld's second commander for two decades until 26 November 1996, when he resigned as president and board member. Pettit lost power struggles with his deputies (Steve Lessing, Tom Tucker, and Joseph M. Gregory) back on March 15 that year that led to his release of COO, possibly brought after the three men learned about Pettit's infidelity, which violated Fulditten's unwritten rules about marriage and social ethics. Bradley Jack and Joseph M. Gregory were appointed co-COOs in 2002, but Jack was relegated to office in May 2004 and left in June 2005 with a severance package of $ 80 million, making Gregory the only COO. While Fuld is considered the "face" of the Lehman brothers, Gregory is responsible for day-to-day operations and he influences the culture to push the bottom line. Gregory was demoted on June 12, 2008 and replaced as president and COO by Bart McDade, who has served as head of Equities, and McDade will see Lehman through bankruptcy. McDade will become one of Lehman's few executives who offer positions with Barclays after their acquisition; he will step down after less than two months.
In 2001, the company acquired private client service, or "PCS", Cowen & amp; Co and then, in 2003, aggressively re-entered the asset management business, which had come out in 1989. Starting with $ 2 billion of assets under management, the company acquired Crossroads Group, the fixed income division of Lincoln Capital Management and Neuberger Berman. These businesses, together with the PCS business and private equity business Lehman, consist of the Investment Management Division, which generated approximately $ 3.1 billion in net income and nearly $ 800 million in pre-tax revenues in 2007. Before the bankruptcy, the company has excess $ 275 billion of assets under management. Overall, since going public in 1994, the company has increased its net income by more than 600% from $ 2.73 billion to $ 19.2 billion and has increased its employee number by more than 230% from 8,500 to nearly 28,600.
At the 2008 ALB China Law Awards , Lehman Brothers was named as:
- Agreement of the Year - Debt Market Agreement of the Year
- Deal of the Year - Market Equity Deal of the Year
Response to the September 11, 2001 attacks
On September 11, 2001, Lehman occupied three floors of the World Trade Center where one of his employees was killed in a terrorist attack that day. Its global headquarters in the Three World Financial Center were heavily damaged and could not be used by falling debris, moving more than 6,500 employees. The bank recovers quickly and rebuilds its presence. Trade operations moved across the Hudson River to the Jersey City, New Jersey facility, where impromptu trading floors were built at the hotel and presented online less than forty-eight hours after the attack. When the stock market reopened on September 17, 2001, Lehman's sales and trading capabilities were restored.
In the following months, the company fanned its operations throughout the New York City metropolitan area in more than 40 temporary locations. The investment-banking division changed the first-floor lounges, restaurants, and all 665 rooms at the Sheraton Manhattan Hotel into an office space.
The Bank also experimented with flextime (for sharing office space) and telecommuting through virtual private networking. In October 2001, Lehman purchased a 32-storey office building, 1,050,000 square feet (98,000 m 2 ) for a reported amount of $ 700 million. The building, located at 745 Seventh Avenue, has just been completed, and is not yet occupied, by rival Morgan Stanley.
With Morgan Stanley headquarters located just two blocks away on 1585 Broadway, after the attack, the company re-evaluated its office plans that would deploy more than 10,000 employees in the Times Square area of ​​New York City. Lehman began moving to a new facility in January and completed in March 2002, a move that significantly boosted morale throughout the company.
The company was criticized for not moving back to its former headquarters in Manhattan. Following the assault, only Deutsche Bank, Goldman Sachs, and Merrill Lynch, from large corporations, remain in the city center. However, Lehman points out the fact that he is committed to living in New York City, that the new headquarters represent the ideal circumstance in which the company is keen to buy and Morgan Stanley is desperate to sell, that when the new building is purchased, the structural integrity of the Three World Financial Center has not was given a clean bill of health, and that the company could not wait until May 2002 for the improvement of the Third World Finance Center to conclude.
After the attack, Lehman's management placed an increasing emphasis on business continuity planning. Unlike its competitors, the company is amazingly concentrated for investment banks with bulges. For example, Morgan Stanley has a 750,000 square foot (70,000 m 2 ) trading-and-banking facility in Westchester County, New York. The UBS trading floor is located in Stamford, Connecticut. The asset management division of Merrill Lynch is located in Plainsboro Township, New Jersey. Aside from its headquarters at Three World Financial Center, Lehman maintains an operations-and-backoffice facility in Jersey City, a space the company considers to depart before 9/11. The space is not only preserved, but expanded, including the construction of a reserve-trade facility. In addition, telecommuting technology was first launched in the days following the attack to allow employees working from home expanded and upgraded for general use throughout the company.
June 2003 SEC litigation
In June 2003, the company was one of ten companies that simultaneously entered into settlement with the US Securities and Exchange Commission (SEC), the New York State Attorney General's Office and various other securities regulators, regarding undue influence on any company research. analysts by his investment-banking division. In particular, the regulators alleged that these companies improperly linked analyst compensation to the investment income of corporate banking, and promised an attractive market research coverage, in exchange for underwriting opportunities. The settlement, known as the "global settlement", provided for a total financial penalty of $ 1.4 billion, including $ 80 million against Lehman, and structural reforms, including complete segregation of investment banking departments from the research department, no analyst compensation, direct or indirectly, from investment-banking income, and the provision of free, independent, third party research to company clients.
Maps Lehman Brothers
Rise of mortgage origination (1997-2006)
Lehman was one of the first Wall Street companies to move into the mortgage origination business. In 1997, Lehman purchased a Colorado-based lender, Aurora Loan Services, an Alt-A lender. In 2000, to expand their mortgage origination pipeline, Lehman bought West Coast subprime mortgage borrowers, BNC Mortgage LLC. Lehman quickly became a force in the subprime market. In 2003 Lehman made $ 18.2 billion in loans and ranked third in the loan. In 2004, this number reached $ 40 billion. In 2006, Aurora and BNC lent almost $ 50 billion a month. Lehman has turned into a real estate hedge fund disguised as an investment bank. In 2008, Lehman had $ 680 billion in assets supported only $ 22.5 billion of the company's capital. From equity positions, commercial real estate ownership is three times greater than capital. In a highly leveraged structure, a 3 to 5 percent drop in the value of real estate will wipe out all capital.
Collapse
Cause
Malfeasance
A March 2010 report by court-appointed inspectors indicates that Lehman executives regularly use cosmetic accounting gimmicks at the end of each quarter to make their finances seem less shaky than they really are. This practice is a type of repurchase agreement that temporarily removes securities from the company's balance sheet. However, unlike typical repurchase agreements, these transactions are described by Lehman as a direct selling of securities and create "a materially misleading picture of the company's financial condition at the end of 2007 and 2008."
Subprime Mortgage Crisis
In August 2007 the company closed its subprime lender, BNC Mortgage, eliminating 1,200 positions in 23 locations, and taking after-tax costs of $ 25 million and a $ 27 million reduction in goodwill. Lehman said that poor market conditions in the mortgage room "necessitate a substantial reduction in resources and capacity in the subprime space".
In 2008, Lehman faced unprecedented losses to the ongoing subprime mortgage crisis. Lehman's loss is the result of holding a large position in subprime and other lower-ranked mortgage subsections while securing an underlying mortgage; whether Lehman does this for not being able to sell low-rated bonds, or making conscious decisions to hold them, is unclear. In any case, the huge losses arising in low-ranking mortgage-backed securities throughout 2008. In the second fiscal quarter, Lehman reported a loss of $ 2.8 billion and was forced to sell $ 6 billion in assets. In the first half of 2008 alone, Lehman shares lost 73% of its value as the credit market continued to tighten. In August 2008, Lehman reported that it intends to release 6% of its workforce, 1,500 people, just before the September third quarter reporting deadline in September.
In September 2007, Joe Gregory appointed Erin Callan as CFO. On March 16, 2008, after rival Bear Stearns was taken over by JP Morgan Chase in fire sales, market analysts stated that Lehman would be the next major investment bank to fall. Callan fielded Lehman's first-quarter conference call, where the company posted a profit of $ 489 million, compared to Citigroup's loss of $ 5.1 billion and Merrill Lynch for $ 1.97 billion which is Lehman's 55th straight quarter. The company's share price jumped 46 percent after the announcement.
On June 9, 2008, Lehman Brothers announced a loss of US $ 2.8 billion in the second quarter, the first since it was decided from American Express, due to market volatility making many hedges ineffective during that time. Lehman also reported that they have raised capital more than $ 6 billion. As a result, there was a major management reshuffle, in which Hugh "Skip" McGee III (head of investment banking) held a meeting with senior staff to strip Fuld and his lieutenant from their authority. Consequently, Joe Gregory agreed to resign as president and COO, and afterwards he told Erin Callan that he should resign as CFO. Callan was appointed CFO Lehman in 2008 but only served for six months, before leaving after his mentor Joe Gregory was demoted. Bart McDade was named to replace Gregory as president and COO, when some senior executives threatened to leave if he was not promoted. McDade took over and brought back Michael Gelband and Alex Kirk, who had previously been expelled from the company by Gregory for not taking any chances. Although Fuld remained CEO, he soon became isolated from the McDade team.
On Aug. 22, 2008, shares in Lehman closed up 5% (16% on the week) on reports that the state-controlled Korea Development Bank is considering buying the bank. Most of the profits were quickly eroded when news came in Korea Development Bank "faced the trouble of pleasing the regulator and attracting partners to the deal." It peaked on Sept. 9, when Lehman's shares fell 45% to $ 7.79, after it was reported that the state-run South Korean company has postponed talks.
Investor confidence continues to erode when Lehman shares lose about half its value and push S & P 500 fell 3.4% on Sept. 9. Dow Jones lost 300 points on the same day due to investor concerns about bank security. The US government has not announced plans to help all possible financial crises that arise in Lehman.
The next day, Lehman announced a $ 3.9 billion loss and its intention to sell a majority stake in its investment management business, which includes Neuberger Berman. Stocks slid seven percent that day. Lehman, having previously rejected questions about the company's sales, reportedly sought a buyer as its share price fell another 40 percent on September 11, 2008.
Just before the collapse of Lehman Brothers, executives at Neuberger Berman sent an e-mail memo showing, among other things, that Lehman Brothers 'top people canceled a multi-million dollar bonus to' send a strong message to employees and investors that management do not neglect accountability for last performance. "
Lehman Brothers Investment Management Director George Herbert Walker IV dismissed the proposal, going so far as to genuinely apologize to the other members of the executive committee of Lehman Brothers for the proposed bonus reduction idea. He wrote, "Sorry team. I'm not sure what's in the water at Neuberger Berman I'm embarrassed and I'm sorry."
Short allegations
During the trial on bankruptcy filings by Lehman Brothers and the AIG bailout before the House Committee on Government Oversight and Reform, former Lehman Brothers CEO Richard Fuld said a number of factors including a crisis of confidence and a bare short selling attack followed by donated fake rumors. both the collapse of Bear Stearns and Lehman Brothers. Home committee chairman Henry Waxman said the committee received thousands of pages of internal documents from Lehman and these documents describe a company in which there is "no accountability for failure".
An article by journalist Matt Taibbi at Rolling Stone states that a bare short sale contributes to the deaths of Lehman and Bear Stearns. A study by financial researchers at the University of Oklahoma's Price College of Business studied the trading of financial stocks, including Lehman Brothers and Bear Stearns, and found "there is no evidence that stock price reductions are caused by bare short sales".
Bankruptcy
On Saturday, September 13, 2008, Timothy F. Geithner, then president of the Federal Reserve Bank of New York, held a meeting on Lehman's future, which included the possibility of an emergency liquidation of his assets. Lehman reports that has held talks with Bank of America and Barclays for possible sale of the company; However, both Barclays and Bank of America ultimately refused to buy the entire company, in the first case because the British government (in particular, United Kingdom Finance Minister Alastair Darling and CEO of Financial Services Authority Hector Sants) refused to permit transactions at the last minute, citing holders stake in the UK, although the deal seems to have been completed.
The following day, Sunday, September 14, the International Swap and Derivatives Association (ISDA) offers an extraordinary trading session to enable market participants to offset positions in various derivatives under Lehman's later bankruptcy. Although bankruptcy filing missed the deadline, many dealers valued the trades they made in special sessions.
Shortly before Monday morning (UTC-5), Lehman Brothers Holdings announced it would file for bankruptcy Chapter 11 citing bank debt of $ 613 billion, $ 155 billion of debt bonds, and $ 639 billion in assets. It further announces that its subsidiaries will continue to operate as usual. A group of Wall Street companies agreed to provide capital and financial aid for the orderly liquidation of banks and the Federal Reserve, in turn, agreed to exchange low-quality assets in exchange for loans and other assistance from the government. Morning witnessed the scenes of Lehman employees deleting files, items with company logos, and other items from the world headquarters at 745 Seventh Avenue. The spectacle continued throughout the day and into the next day.
Later in the day, the Australian Stock Exchange (ASX) froze Lehman's Australian subsidiary as a market participant after clearing-house terminated its contract with the company. Lehman shares tumbled more than 90% on Sept. 15, 2008. Dow Jones closed more than 500 points on Sept. 15, 2008, which was by then the biggest one-day decline since the days after the 11 September 2001 attacks.
In the UK, the investment bank goes into administration with PricewaterhouseCoopers appointed as administrator. In Japan, the Japanese branch, Lehman Brothers Japan Inc., and its parent company filed a civil reorganization on September 16, 2008, at the Tokyo District Court. On September 17, 2008, the New York Stock Exchange abolished Lehman Brothers.
On March 16, 2011 about three years after filing for bankruptcy and following a filing in Manhattan's US bankruptcy court, Lehman Brothers Holdings Inc. announced it will seek a creditor approval of the reorganization plan on October 14 followed by a confirmation hearing to follow on November 17..
Liquidation
Barclays Acquisition
On September 16, 2008, Barclays PLC announced that it would acquire Lehman's "uncovered" portion of $ 1.75 billion, including most of Lehman's operations in North America. On September 20, 2008, a revised version of the deal, a $ 1.35 billion (£ 700 million) plan for Barclays to acquire Lehman's core business (notably the $ 960 million headquarters, a 38-storey office building in Midtown Manhattan, with responsibility for 9,000 ex-employees), has been approved. Manhattan court bankruptcy Judge James Peck, after 7 hours of trial, decides: "I must approve this transaction because this is the only transaction available." Lehman Brothers became victims, consequently the only true icon fell in the tsunami that has hit the credit market This is the most important bankruptcy hearing I've ever had, it can never be considered a precedent for future cases. "It's hard for me to imagine a similar emergency."
Luc Despins, then partner in Milbank, Tweed, Hadley & amp; McCloy, an adviser to the creditor committee, said: "The reason we do not mind is really based on a lack of viable alternatives.We do not support transactions because there is not enough time to review them properly." Under the amended agreement, Barclays will absorb $ 47.4 billion in securities and assume $ 45.5 billion in trading obligations. Lehman's lawyer Harvey R. Miller from Weil, Gotshal & amp; Manges, said "the purchase price for the real estate component of the deal would be $ 1.29 billion, including $ 960 million for Lehman New York's headquarters and $ 330 million for the two New Jersey districts." Lehman's initial estimate appreciated its headquarters at $ 1 , 02 billion but the valuation of CB Richard Ellis this week is priced at $ 900 million. "Furthermore, Barclays will not acquire Lehman Eagle Energy unit but will have an entity known as Lehman Brothers Canada Inc., Lehman Brothers Sudamerica, Lehman Brothers Uruguay and Private Investment Management business for high-value individuals. Finally, Lehman will retain $ 20 billion in securities assets at Lehman Brothers Inc. that are not transferred to Barclays. Barclays obtained a potential liability of $ 2.5 billion to be paid as a severance, if he chose not to keep some of Lehman's employees out of the 90-day guarantee.
Acquisition of Nomura
Nomura Holdings, Japan's top brokerage firm, agreed to buy the Asian Lehman Brothers division for $ 225 million and part of the European division at a nominal $ 2 fee. It will not take any assets or trade liabilities in European units. Nomura negotiates a low price because it only acquires Lehman employees in the region, and not its shares, bonds or other assets. The latest Lehman Brothers Annual Report identifies that a subsidiary of non-US Lehman Brothers is responsible for more than 50% of the global revenue generated.
Sales of asset management businesses
On September 29, 2008, Lehman agreed to sell Neuberger Berman, part of its investment management business, to a pair of private equity firms, Bain Capital Partners and Hellman & amp; Friedman, with $ 2.15 billion. The transaction is expected to close in early 2009, with the approval of the US Bankruptcy Court, but a competing bid was put in by the company's management, which ultimately won a bankruptcy auction on December 3, 2008. The creditors of Lehman Brothers Holdings Inc. retained 49% of the company's common property rights, now known as Neuberger Berman Group LLC. In Europe, the Business Asset Management Quantitative was reclaimed by its employees on November 13, 2008 and has been renamed to TOBAM.
Financial collapse
Lehman's bankruptcy is the bank's biggest investment failure since Drexel Burnham Lambert collapsed amid fraud charges 18 years earlier. Immediately after the filing of bankruptcy, financial markets have begun to experience periods of extreme volatility, in which the Dow suffered its biggest one-day loss, the largest intra-day range (over 1,000 points) and the largest daily gain points. What happens next is what many people call the "perfect storm" of economic pressure factors and eventually the $ 700 billion bailout package (Asset Relief Assistance Program) prepared by Henry Paulson, Minister of Finance, and approved by Congress. The Dow finally closed at a fresh six-year low of 7,552.29 on Nov. 20, followed by a further decline to 6626 in March next year. Durvexity jumped, due to funding problems in major investment banks.
The fall of Lehman also has a strong effect on small private investors such as bondholders and holders of so-called Minibonds. In Germany, structured products, often indexed, are mostly sold to private investors, seniors, retirees, students, and families. Most of the currently valuable derivatives are sold by Citigroup, Citibank Germany, which is now owned by CrÃÆ'Â © at Mutuel.
Ongoing Litigation
On 11 March 2010, Anton R. Valukas, court-appointed tester, published the results of a year-long investigation into Lehman Brothers finances. The report reveals that Lehman Brothers used accounting procedures called repo 105 to temporarily exchange $ 50 billion of assets into cash before publishing its financial statements. This action can be seen to involve both Ernst & amp; Young, the bank's accounting firm and Richard S. Fuld, Jr., the former CEO. This could potentially cause Ernst & amp; Young people are found guilty of financial malpractice and Fuld faces time in jail.
According to The Wall Street Journal , in March 2011, the SEC announced that they were not convinced that they could prove that Lehman Brothers violated US law in its accounting practices.
In October 2011, the administrator of Lehman Brothers Holding Inc. losing its appeal for canceling a court order that forced them to pay £ 148 million into their unfunded retirement plan.
As of January 2016, Lehman has paid more than $ 105 billion to unsecured creditors. In addition, JPMorgan will pay $ 1.42 billion in cash to settle a lawsuit that accuses JPMorgan of draining Lehman Brothers liquidity just before the accident. The settlement will allow another $ 1.496 billion to be paid to the creditor and a separate $ 76 million deposit.
Mergers and acquisitions history
Here is an illustration of major mergers and acquisitions of companies and historical predecessors (this is not an exhaustive list):
Board of directors
- Richard S. Fuld, Jr., chairman and chief executive officer
- Michael L. Ainslie
- John F. Akers
- Roger S. Berlind
- Thomas Cruikshank
- Marsha Johnson Evans
- Mr. Christopher Gent
- Roland A. Hernandez
- Dr. Henry Kaufman
- John D. Macomber
Former officers
- Richard S. Fuld, Jr.
- Scott J. Freidheim
- Bart McDade
- Joe Gregory
- Ian Lowitt, chief financial officer at the collapse of Lehman
- Jessie Bhattal
- Jeremy Isaacs (not Sir Jeremy Isaacs, producer and executive of British television)
- Hugh McGee
- George Herbert Walker IV
- Michael Gelband
In popular culture
The weekend event that led to the bankruptcy of Lehman was dramatized in The Last Days of Lehman Brothers, a British-made television in 2009.
In the 2010 animated film Desigal Me , Lehman Brothers was referred to early. Gru's main character travels to Bank of Evil, the bank that funds all the evil plots for criminals around the world, to try to take out a loan. As he passes under the banner with the bank name, and under "Bank of Evil", in small letters, it reads, "Previously Lehman Brothers".
The 2011 American independent drama film Margin Call focuses on a 24-hour period event at a major investment bank based on a large investment bank amalgam, drawn from the Lehman Brothers culture. (However, the events in the film are primarily portrayals of Goldman Sachs action.)
In the 2011 American comedy film Horrible Boss , Kenny Sommerfeld mentions that he is a Yale graduate who works for Lehman Brothers. He earns a high six figure salary, but now can not buy even basic necessities and live in poverty.
The 2011 HBO Movie Too Big to Fail tells the day before Lehman Brothers declared bankruptcy and subsequent collapse.
The fall of Lehman Brothers is depicted in the 2015 movie The Big Short where two characters walked around Lehman Brothers offices after bankruptcy to see the main trading floor.
Lehman Brothers parodied in the Disney animated film 2016 Zootopia , which depicts a financial company called "Lemming Brothers", which is managed by lemming.
In the debut novel Imbolo Mbue 2016, Behold the Dreamers , an immigrant from Cameroon is a driver to Clark Edwards, an executive at Lehman Brothers.
Primary location (first year of occupancy)
- 17 Court Square, Montgomery, Alabama (1847) *
- 119 Liberty Street, New York, NY (1858)
- 176 Fulton Street, New York, NY (1865-1866?)
- 133-35 Pearl Street, New York, NY (1867)
- 40 Exchange Place, New York, NY (1876)
- 16 William Street, New York, NY (1892)
- One William Street, New York, NY (1928) **
- 55 Water Street (1980) ***
- 3 World Financial Center (1985)
- 745 Seventh Avenue, New York, NY (2002)
* Henry Lehman founded his first storefront on Commerce Street, in Montgomery, in 1845. In 1848, one year after Emanuel's arrival, the brothers moved "H. Lehman & Bro." to 17 Court Square, where it remained when Mayer arrived in 1850, forming "Lehman Brothers" ** Designated as a landmark by the New York City Land Preservation Committee in 1996.
*** Sales and trading personnel have been in this location since 1977, when they joined the company's bankers and investment brokers.
See also
- Lehman Brothers Treasury
- MF Global, the largest Wall Street company collapsed, as it did in 2011, since the Lehman Brothers disaster in September 2008.
- Valukas Report about Lehman's failure
References
Further reading
- Auletta, Ken. Greed and Glory on Wall Street: The Lehman House Fall . Random House, 1985
- Bernhard, William, L., Birge, June Rossbach Bingham, Loeb, John L., Jr. Many Lehmans: Lehman Mayer's Family of Lehman Brothers, Remembered by His Descendants . Jewish Historical Center, 2007.
- Birmingham, Stephen. Our Crowd: Big Jewish New York Families . Harper and Row, 1967.
- Dillian, Jared, Street Freak: Money and Insanity at Lehman Brothers: A Memoir , New York: Simon and Schuster, September 13, 2011. ISBN: 978-1-4391-8126-3
- Geisst, Charles R. Last Partnership . McGraw-Hill, 1997
- Shirkhedkar, Jayant. Saving Lehman, One at a time . McGraw-Hill, 2007
- Lehman Brothers. A Centennial - Lehman Brothers 1850-1950 . Spiral Press, 1950
- Schack, Justin (May 2005). "Restoring Lehman's House". Institutional Investor , p.Ã, 24-32.
- Wechsberg, Joseph. The Merchant Bankers . Pocket Book, 1968
- Nocera, Joe (September 11, 2009). "Lehman Must Be Dead So Global Finance Can Live". The New York Times .
- Lawrence, G. McDonald. (2009) Failure of Healthy Colossal Colossal: The Story In The Collapse Of Lehman Brothers . Business Crown
- Sorkin, A. Ross (2009). Too Big for Failure: The Inside Story of How Wall Street and Washington Fought to Store the Financial System - and Theirself . Viking Adult
- Kane and Stollery (2013). "Lessons learned: exchange of views".
External links
- Why Lehman Brothers and Bear Stearns Shrink
- Lehman Brothers case study - KPMG China
- crisis-lehman - Lehman Brothers in Spain
- Lehman Brothers bankruptcy site linked from Lehman Brothers home page
- Melse, E. (2009-10-28), TEMA Lehman Brothers - Video analysis in Dutch. Masterclass
- The Lehman Brothers Treasure Trove - slideshow by Life magazine
- What does Lehman Brothers mean to a technician ?, The Register
- The BBC: The Love of Money, the Bank that Destroys the World
- Bloomberg: Lehman's Largest Bankruptcy Case File as a Balk Lawyer
- Lehman Brothers Records in the History Collection of Baker Library, Harvard Business School
- Barclays Group Archive: Lehman Brothers
Source of the article : Wikipedia
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