Accounting tricks investigated by SEC

[maddezmom]

Source: BBC

Accounting tricks investigated by SEC

Lehman Brothers stands accused of using accounting tricks to mask losses
The US financial regulator has launched an investigation into accounting tricks by Wall Street firms designed to mask heavy losses.

The Securities and Exchange Commission (SEC) has written to financial firms to see how widespread the use of accounting tools such as Repo 105 is.

A recent report accused collapsed bank Lehman Brothers of using this device to hide the true extent of its losses.

The SEC said the investigation will last a number of weeks.



Read more: http://news.bbc.co.uk/1/hi/business/8594465.stm

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SEC launches ‘Repo 105’ probe
By James Politi in Washington

Published: March 30 2010 00:12 | Last updated: March 30 2010 00:12

US regulators on Monday asked more than 20 financial groups whether they engaged in transactions along the lines of “Repo 105” – an accounting device that helped Lehman Brothers conceal its high leverage ratio during the financial crisis.

The corporate finance division of the Securities and Exchange Commission wrote to chief financial officers of “close to two dozen” large foreign and domestic banks and insurers, demanding details of repurchase agreement deals.

The SEC probe includes whether companies booked repos as asset sales for accounting purposes over the past three years, and whether these deals were concentrated with certain counterparties or certain countries. Regulators also asked companies to quantify the amount of repos that were disclosed as asset sales and to explain the “business reasons” for use of these structures.

The heightened scrutiny of repos is the result of a report by a court-appointed examiner this month which found that Lehman used the Repo 105 technique to book temporary repurchase agreements as permanent asset sales in 2008. This helped Lehman conceal about $50bn from its balance sheet, thus reducing its leverage ratio and appearing healthier to the eyes of investors and analysts.

more: http://www.ft.com/cms/s/0/734fc852-3b83-11df-a4c0-00144feabdc0.html

[Po_d Mainiac]

1. In any other sector of business

This would be accounting fraud. Willful distortion of financial reports to mislead shareholders should be met with indictments. Where is the Justice Department??

[dmosh42]

2. This is the same SEC that investigated Madoff? n/t

[mrdmk]

3. Excuse my indignation, but the SEC is doing an investigation with a questionnaire?

How serious is the SEC about getting the facts with a questionnaire?

These are public companies, all the SEC has to do is go look...

[Iowa]

4. I was thinking the same thing. It's a joke.

[defendandprotect]

5. ... and after this, we have to straight out our government's accounting tricks . . .

Much was changed by the right wing administrations --

[TheWatcher]

6. "Accounting tricks investigated by SEC "

Sternly Worded Letter warning groups not to EVER DO THIS AGAIN, and light Wrist Slapping to follow.

Crime Pays in The United Banana Republic Of Amerika.