The Fuld Guy: Lehman CEO Finally Sued Over Repo 105 Scam

It always seemed to us that the whole Lehman Repo 105 fiasco seemed to be too much of a slam dunk for nobody to get sued over it. Yet here we were, almost a year after the Valukas report, and nobody was even pretend to be fighting off justice, or even a bunch of brain impaired porn addicts. Not so any longer. Bloomberg reports that per an unsealed filing in the Lehman bankruptcy docket, the Lehman 401(k) retirement plan, which had just under $230 million invested in Lehman stock, has sued Dick Fuld "and other former executives of the defunct firm for failing to disclose Repo 105, a financing method allegedly used to conceal billions of dollars of debt." And all this is occurring as the SEC is scrambling to find new and improved ways to pay off its multi-million midget porn bill, up to an including firing every staffer with an IQ over 50...All 4 of them.

From Bloomberg:

The amended lawsuit, based partly on a 2,200-page report by Lehman bankruptcy examiner Anton Valukas, was filed under seal in September and ordered unsealed by a judge on Nov. 30, according to a filing in U.S. District Court in Manhattan. The original suit was filed in 2008.

The 401(k) plan had $228.7 million invested in the Lehman Brothers Stock Fund, which had 10.6 percent of its assets in Lehman shares trading at $65.44 each on Dec. 31, 2007, according to the lawsuit. The company’s benefits committee liquidated the fund nine months after Lehman went bankrupt in September 2008 and its stock was worthless, the suit said.

Fuld and other executives “knew or should have known” about Repo 105 and other risks taken by Lehman, “and therefore knew or should have known that the plan’s assets should not have been invested in company stock,” according to the complaint.

And unlike Phil Faclone, we hope that Dick has a cool couple hundred million in his checking account. He may need it soon.

The plaintiffs asked the judge to force the executives to “make good” all losses to the 401(k), pay damages equal to the losses, and restore profits that participants “would have made if defendants had fulfilled their fiduciary obligations.”

Of course, if defendants had fulfilled their "fiduciary obligations", the end result would have been that the plan participants would have ended up likely owing money after their entire stock ended up being margined so that Dick Fuld could raise capital to IPO Greenlight and subsequently naked short it to death. After all, as Ben Bernanke will soon find out, sometimes a complete wipe out is the best thing that can happen to you.