Once again, former Lehman Brothers Holdings Inc. executives want an insurance fund to cover their expenses stemming from securities-related misconduct they are accused of committing. This time, they want to use the money to cover their legal bills. On Monday, former Lehman Chief Executive Richard Fuld and other ex-executives submitted a filing in US Bankruptcy Court to responded to an objection made by the former owners of Maher Terminal Holdings Corp. objecting to this fund use.
Basil Maher and M. Brian Maher claim that the paperwork submitted by the former executives doesn’t support use of the insurance monies. The brothers have been in opposition with Lehman since the investment bank filed for bankruptcy in 2008. The Mahers contend that in 2007 when they wired $600 million for their sale of Maher Terminal Holdings Corp. to Lehman, the financial firm allegedly placed their money in investments that were riskier than what they had wanted. The Mahers are still trying to recoup their losses form Lehman.
The former Lehman executives want the court to give them access to a diminishing $250 million insurance fund. They say that not only would this prevent a protracted court battle with local governments that they’ve already settled with, but also, they don’t believe this will impact the investment bank’s creditors. The ex-executives had settled for $1.05 million a dispute with six California municipalities that had invested $35 million into Lehman in the two years before it failed. The municipalities later filed their securities case accusing Lehman of making misrepresentation and omissions in their offering documents, which is what the governments used as reference when making the decision to invest in the financial firm.
The former Lehman executives just recently made another request to use $90 million from the insurance fund to settle a securities lawsuit filed by Lehman shareholders. They also have asked the bankruptcy court for $8.25 million in insurance money to settle a securities case filed by the state of New Jersey.
Should the bankruptcy judge grant the ex-Lehman officials’ requests, then Fuld and the others won’t have to put out any out-of-pocket expenses for their alleged misconduct. Apparently, it is not unusual for insurance money to cover corporate officers and directors that are the target of shareholder lawsuits.
Says Shepherd Smith Edwards & Kantas LTD LLP founder and securities fraud attorney William Shepherd, “Amazing that those who put Lehman into bankruptcy can now use the first dollars available to pay their own legal bills rather than to pay their victims, including investors and the subordinates they led down the garden path to disaster. Apparently, it is again nice to be part of the ‘one-percent’ on Wall Street.”
Fuld Leads Ex-Lehman Officials in Defending Insurance Use, The Wall Street Journal, October 17, 2011
Ex-Lehman Officials to Pay $90 Million to Settle Suit, NY Times, August 25, 2011
Fuld, Lehman Executives Settle Lawsuit by California Cities, Businessweek, September 28, 2011
More Blog Posts:
Lehman Brothers’ “Structured Products” Investigated by Stockbroker Fraud Law Firm Shepherd Smith Edwards & Kantas LTD LLP, Stockbroker Fraud Blog, September 30, 2008
FINRA Orders UBS Financial Services to Pay $8.25M for Misleading Investors About Security of Lehman Brothers Principal Protected Notes, Stockbroker Fraud Blog, April 15, 2011
European Leaders Work to Get a Grip on Debt Crisis, Institutional Investors Securities Blog, October 19, 2011
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