Several pension funds are suing Lehman Brothers's former CEO Dick Fuld, CFO Erin Callan and other top executives in federal court in New York for misleading investors. The suit - which was filed over 2 years ago - is now going to trial as Judge Kaplan ruled in favour of the pension funds and denied a motion to dismiss holding that “It is entirely plausible to conclude that the misleading picture that Lehman portrayed played a material part in keeping its stock higher.” Therefore, the losses suffered by the investors might be attributable to the fraud. He also ruled that the suit “sufficiently alleges facts giving rise to an inference that these defendants were involved in setting Lehman’s risk policies and knew that the statements concerning enforcement of risk management policies were false.”
One wonders if there is sufficient evidence for similar legal action in respect of executives at Anglo Irish and other failed banks in Ireland. Executives at these entities also claimed that they were in good financial health until they collapsed. The Lehman ruling is available here.
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