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Did Andrew Ross Sorkin Misrepresent The Facts Surrounding Lehman's Whistleblower?

Tyler Durden's picture




 

In the aftermath of the Zachery Kouwe plagiarism fiasco, the last thing Andrew Ross Sorkin's Dealbook needs is another scandal. Yet this is precisely what may come out of a recent column by the TBTF author, in which ARS insinuated that Lehman whistleblower Matthew Lee came forth with incriminating Repo 105 evidence only after he was made aware he was about to be "downsized." The Columbia Journalism Review's Ryan Chittum debunks this story, after pointing out some potentially gross misrepresentations in the Sorkin column, which go to directly to motive and to the integrity behind Lee's actions. "The Times’s DealBook editor Andrew Ross Sorkin, who wrote the
column, quotes the sources saying the whistle blower came forward only
after “it became clear” he was to be replaced in his job. We’ll get to
that peculiar phrasing in a minute, but the main problem is the Times story gives no indication that Lee was called for comment. In fact, he wasn’t called, according to Lee’s lawyer, Erwin Shustak, whom I talked to yesterday. “I’ve never spoken to the man (Sorkin) in my life,” Shustak says. “Nobody’s spoken to Matthew.” That doesn’t meet a basic fairness test. As it happens, Shustak tells us that Lee had no idea his job was in danger." If indeed Sorkin misstated facts, a retraction is the only recourse as the potential for legal escalation on all sides of the story is huge. We are confident that while to Lehman managing directors $50 billion may have been a drop in the ocean, legal prosecution going after either ARS (or Lee) to reclaim it in part (or in whole) will surely make the Dealbook editor's head spin, even after accounting for Paulson and Geithner's 10,000 purchases of TBTF each (exaggeration ours... we hope).

Chittum writes:

There are some real journalistic lapses in a New York Times column Tuesday
that quoted anonymous sources about a Lehman Brothers whistleblower who
tried to warn about the failing bank’s questionable accounting
maneuvers, including one known as Repo 105.

The problematic passage is here:

Lehman’s shell game didn’t come to light until June 2008,
when a lower-level executive named Matthew Lee sent a letter to
management raising a host of questions about the firm’s practices. (By
the way, the S.E.C. and Fed were still working inside the building at
this point.)
What the examiner didn’t report, however, was that
Mr. Lee started raising questions about Repo 105 only when it became
clear that he was being replaced in his role, according to people
briefed on the matter. Indeed, Mr. Lee’s original letter to management
did not mention the use of Repo 105.

Chittum then proceeds to note the abovementioned discussion with Lee's lawyer Shustak in which he makes it clear that Sorkin never spoke to his client.

That doesn’t meet a basic fairness test. As it happens, Shustak tells us that Lee had no idea his job was in danger.

“That comment was made not based on any reality or fact that I’m
aware of,” Shustak says. “He couldn’t possibly be accurate because I
know that until Mr. Lee wrote these letters, he had not been notified
that he was part of any layoffs.”

This is useful information that blunts, if not debunks, the
anonymous sources’ innuendo that Lee was motivated to come forward
because he was about to lose his job. Indeed, an on-the-record denial
carries far more weight than an off-the-record or on-background attack,
which this assertion clearly was. Sorkin declined to comment.

The slip occurs near the bottom of a column on the failures of
regulators to discover the Lehman scandal that was right in front of
them, and is a jarring end to an otherwise fine piece.

Chittum continues:

Also, as noted, the Times’s phrasing poses problems, reporting Lee blew the whistle only after “when it became clear” he was being replaced.

Clear to whom? If Lee didn’t know he was being replaced the fact that
he was on his way out is irrelevant. The phrase itself is blurry. Why?

Lee’s lawyer, Shustak, says Lee never sought the limelight:

“Matthew is a very private person,” he says. “His life has been
devastated when he was let go. He has not worked since then and is
living off his 401k. He just doesn’t want to get into the middle of
whatever lawsuits are going to be coming out of this whole report.”

It is a pity that the NYT, which recently let go hundreds of press room staffers, in the latest round of layoffs, has been resorting to such devices as attributing reality where there is none. In the old days, journalists would be forced to issue a retraction (or much worse) if indeed their reporting was not based on facts, as this particular piece so far appears to be. To be sure, this is not the first time the Columbia Journalism Review has discussed ARS - a week ago Dean Starkman wrote the most scathing review of Too Big To Fail we have yet read. Could this be just a case of some bad blood? Or, as Starkman insinuates, is this merely yet another case of Wall Street media capture? the truth will be made apparent over the next several months by the tone of Sorkin's pieces. Nonetheless, having already attempted to exonerate Fuld once, one wonders just where Sorkin's allegiance lies.

By the way, doesn’t it seem increasingly hard to vilify Richard S. Fuld Jr., the former chief executive of Lehman Brothers,
given what’s happened since that firm filed for bankruptcy? 

No Andrew, it doesn't. Yet we understand. After all, a sequel to TBTF has to be in the works at some point. And should Andrew lose his contacts, he may have to rely on his extensive understanding of finance to piece things together as an impartial outsider for once. Ironically, the Lehman examiner's report is precisely what Too Big To Fail should have been, had ARS actually dug in underneath the surface of all the primary material he had been presented with. We are surprised Doubleday or Penguin has not yet offered Valukas an advance for his next much more relevant Wall Street thriller.

 

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Thu, 03/18/2010 - 12:06 | 269361 Cookie
Cookie's picture

Check out the Guardian's version of events

http://www.guardian.co.uk/business/2010/mar/16/lehman-whistleblower-audi...

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thu, 03/18/2010 - 12:07 | 269364 SDRII
SDRII's picture

saw ARS working out - lightweight there too

Thu, 03/18/2010 - 12:07 | 269366 etrader
etrader's picture

Speaking of Banks:

The rumour mill is at full chatter of a FED discount rate rise tonight......

 

Thu, 03/18/2010 - 12:43 | 269422 Missing_Link
Missing_Link's picture

I thought they said they'd keep rates exceptionally low for an exceptionally long time period  ...?

Besides, who trades on rumors?

Thu, 03/18/2010 - 12:15 | 269374 Astute Investor
Astute Investor's picture

ARS is just a starf**cker masquerading as a journalist.....

Thu, 03/18/2010 - 12:55 | 269435 Noah Vail
Noah Vail's picture

Got that right. I read his book only because someone gave it to me. Unbelievable! He made the bansters, Paulson and Geithner into heros, saved the nation, they did. The guy is a disgrace to the human race. As such, CNBS is right where he belongs, among like minded shills and sycophants like Liesman and the stockbrokers, and all the others who suck on the taxpayer teat.

Thu, 03/18/2010 - 14:25 | 269523 Ned Zeppelin
Ned Zeppelin's picture

you and I think alike. Shame on me for not reading through all of the posts.

Thu, 03/18/2010 - 16:48 | 269672 sgt_doom
sgt_doom's picture

Effing A, Noah, effing A, dude!

His was just another Wall Street-financed disinformation number: those "wise men of Wall Street" -- Paulson, Geithner and Greenspan, pulled us back from the abyss!

Kiss my all-American ass!!!!!!

And lest anyone forget, Greenspan, after leaving as head of the Fed, immediately joined up with th Paulson fund and made a s**tload of money betting on the collapse of the financial system.

Sounds perfectly reasonable to the ARS clown.

Thu, 03/18/2010 - 15:00 | 269551 Miles Kendig
Miles Kendig's picture

Most assuredly.  The classic reference.... As ARS may one day wake up and appreciate that most folks believe that once you're a co*ksu#%er, you'll always be one. 

http://www.youtube.com/watch?v=AgZla9LETtI

Thu, 03/18/2010 - 12:18 | 269377 Careless Whisper
Careless Whisper's picture

sorkin is a weasel

Thu, 03/18/2010 - 12:24 | 269390 Cognitive Dissonance
Cognitive Dissonance's picture

"Did Andrew Ross Sorkin Misrepresent The Facts Surrounding Lehman's Whistleblower?"

YES!

Does the view ever change when you're not the lead dog?

No!

Thu, 03/18/2010 - 12:31 | 269404 Stevm30
Stevm30's picture

Enlightening article - thanks.

Thu, 03/18/2010 - 12:42 | 269421 ReallySparky
ReallySparky's picture

Report out today that MSNBC and CNN had ratings LOWER than the Cartoon network.  Fitting.

Thu, 03/18/2010 - 12:48 | 269427 Cognitive Dissonance
Cognitive Dissonance's picture

It's clear that reality (at least the MSNBC/CNN version) is not as compelling as the alternative. Time to put face paint on the anchors since they can't lower the cleavage showing blouses any further and the FCC won't allow "The Naked News" on TV.

BTW, The Naked News has pretty good news quality, particularly their foreign desk. No kidding.

http://www.nakednews.com/

Thu, 03/18/2010 - 16:51 | 269675 sgt_doom
sgt_doom's picture

Wow, if only we had the Naked News in America!  Oh, we do....

Thu, 03/18/2010 - 22:39 | 269851 Hulk
Hulk's picture

Move over Robo!

Can't wait to see Liesman and Santelli on NN (not)

Celente interviewed on NN would be interesting though...don't think I would hear much, don't know how you can focus on the actual news content  C D..

Thu, 03/18/2010 - 12:45 | 269426 crzyhun
crzyhun's picture

Bingo!

WE desperately need good journalists now. DO not read this as espousing a contrary view to the current gov't. A strong fifth estste makes us all better as citizens as it informs down the middle the matters at hand and objectively uncover more, I know I am just an idealist. No- more of a standards type guy. I have seen this ARS on CNBS and read his old columns at New Jerk Times, hose me down now.

Thu, 03/18/2010 - 12:58 | 269438 Ivar Kreuger
Ivar Kreuger's picture

Read the language of the Sorkin articles.

http://www.nytimes.com/2010/03/16/business/16sorkin.html?dbk

It is fucking state-controlled media, through and through.

Consider how he qualifies the Repo 105 transactions:

One crucial move was to shift assets off its books at the end of each quarter in exchange for cash through a clever accounting maneuver, called Repo 105, to make its leverage levels look lower than they were.

Clever trick, accounting gimmick, creative accounting.

The media is bending over backwards to prevent calling Repo 105 what it was.

Unethical and most likely illegal.

Sorkin also points out this gem.

There’s a lot riding on the government’s oversight of these accounting shenanigans. If Lehman Brothers executives are sued civilly or prosecuted criminally, they may actually have a powerful defense: a raft of government officials from the S.E.C. and Fed vetted virtually everything they did.

How the fuck is that a defense.

Reminds me of Nixon "when the President (in this case the Government) does it, its not illegal."

Priceless.

The regulators were never regulators, the watchdogs are really foxes.

We are the only chance of bringing this shit to light.

And Repo 105 is the most effective tool we have to date.

Don't let it go Tyler.

Thu, 03/18/2010 - 13:09 | 269452 Cursive
Cursive's picture

Andrew Ross Sorkin is a silly little bitch having a love affair with the mirror.

Thu, 03/18/2010 - 14:11 | 269490 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

ARS is a patsy, as in "Warren Buffet" patsy.  If you choose to watch this, please remember, he is not a sell out, he is not having fun (like when Rudy dresses in drag), he is a patsy.

Warren Buffet does an Axel Rose impression...he does whatever he is told to do; buy 90% of the worlds known silver reserves from COMEX and then turn and sell it to the deRothschilde's bank Barclays, which they in turn use to set up ishares silver trust (SLV), whatever, he does what he is told...ALWAYS.

http://www.youtube.com/watch?v=itS9eyO9JLs

Thu, 03/18/2010 - 14:03 | 269501 Ivar Kreuger
Ivar Kreuger's picture

Mr, LH: ARS is a patsy, as in "Warren Buffet" patsy.  If you choose to watch this, please remember, he is not a sell out, he is not having fun (like when Rudy dresses in drag), he is a patsy.

 

This is most unsetteling for Americans.

Very few people can truly grasp the extent to which the media/infomation is controlled.

 

Thu, 03/18/2010 - 14:13 | 269511 reading
reading's picture

ARS seems to have missed the point.  It is clear LEH was using Repo 105 without acknowledging it -- even when pressed by Einhorn as to why their numbers were changing.  It is also clear that this guy (LEE) brought it to the attention of those who were supposed to be in charge.  It is clear the only thing they did about it was fire him.  Whether he brought the info up before or after he knew or didn't know he was going to lose his job does not make one f**king bit of difference.  Lehman was cooking the books and CLEARLY they were not the only the ones.  Unfortunately, they were just the last one left without a seat when the music stopped.

Thu, 03/18/2010 - 14:23 | 269520 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Dude misses points, period.  He signs "ARS" by the way haha.

Thu, 03/18/2010 - 14:24 | 269521 Ned Zeppelin
Ned Zeppelin's picture

ARS = synchophant for the TBTFs, shill and apologist for the likes of Lady Lloyd and Hank Paulson.  To call him pond scum would be an insult to pond scum everywhere, as at least pond scum serves some useful purpose.  File him under CNBC correspondents and such, and he is worth no further mention.

Thu, 03/18/2010 - 14:33 | 269532 Miles Kendig
Miles Kendig's picture

Classic response from those that have none on a subject that was contrived for public consumption.

Thu, 03/18/2010 - 17:03 | 269681 Rick64
Rick64's picture

It seems these days the people with morals and integrity are a minority.

Fri, 03/19/2010 - 08:51 | 270011 jerseyredd
jerseyredd's picture

I am floored, I can not believe it - Speechless. Oh wait, I was thinking of Lady Gaga.

Wed, 04/14/2010 - 08:28 | 299744 mark456
mark456's picture

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