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SEC's Lehman Probe Keys on Repo 105: Report

The Securities and Exchange Commission has reportedly been asking former Lehman employees lots of questions about the accounting maneuver.



) -- Repo 105 is rearing its ugly head again.


Wall Street Journal

reported late Thursday that the

Securities and Exchange Commission

is zeroing in on the use of the infamous accounting maneuver at

Lehman Bros.

ahead of the company's implosion in September 2008.

Specifically, the


said SEC officials were looking into "whether former Lehman executives failed to adequately mark down" the real-estate portfolio the bank acquired when it bought

Archstone-Smith Trust

with Tishman Speyer in May 2007. The paper is also reportedly looking into whether Lehman properly disclosed losses from the deal to investors.

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Lehman's use of Repo 105 was discussed in March in exhausting detail in the


prepared by the company's bankruptcy examiner. The accounting method involved shifting billions of dollars of assets around the company's balance sheet at different times.



report said SEC officials have questioned "a number of former Lehman employees" in recent weeks, but added that the agency has yet to indicate whether the investigation is expected to result in any formal charges.

The paper added that the progress in the probe could mean the SEC is getting closer to filing civil charges involving Lehman, "though a decision doesn't appear imminent."


Written by Michael Baron in New York.

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Michael Baron


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