Posts Tagged ‘Lehman Brothers’

Former Lehman Employees Want to Hold Board of Directors Liable for Investing in Company Stock Right Before Bankruptcy

Should a company’s board of directors be held liable for investing employees’ retirement savings in company stock knowing that the company is about to file for bankruptcy? That’s the question that former employees of Lehman Brothers Holdings, Inc. have put before a U.S. Bankruptcy Court in Manhattan.

The employees are trying to revive a suit against Lehman’s directors, including former Chief Executive Richard Fuld, for investing their retirement savings in Lehman stock at the same time the company was using an accounting trick to disguise its financial condition.

The employees argue that new revelations about accounting irregularities and Lehman’s exposure to subprime mortgages support their claim that the investment bank should not have purchased its own stock for an employee retirement fund in the time between Bear Stearns’s collapse in March 2008 and Lehman’s Chapter 11 filing in September 2008.

Lehman’s board had an obligation to “prevent the plan’s catastrophic losses before the company filed for bankruptcy and hundreds of millions of dollars of employees’ retirement savings vanished,” the employees charged in recently filed court papers.