Lehman Brothers Faces Shareholder Class Action Lawsuit


A class action lawsuit has been filed against the Lehman Brothers Holdings Inc at U.S. District Court in New York on Wednesday. The civil suit, accuses the company and its four high ranking officers for the economic losses suffered by the shareholders of the company. The lawsuit also accuses the company of issuing misleading statements and withholding material information in order to gain profit by selling company stock at artificially inflated prices. It can be added that the shares of the Lehman Brothers Holdings have plunged more than 60 percent this year as a result of its exposure to the sub-prime mortgage crisis.

The lead plaintiff of the lawsuit is Cement Masons International Association Local 262 Annuity Fund. The lawsuit has been filed on behalf of all the purchasers who purchased Lehman Brothers common stock between Sept. 13, 2006 and June 2008.

The lawsuit also charges four high ranking officials namely Chief Executive Richard Fuld, former Chief Financial Officer and head of risk management Christopher O’Meara, Joseph Gregory and Erin Callan. The suit accuses Fuld, Gregory and O’Meara of concealing alleged fraud in order to sell shares and reap $167 million in gross proceeds as a result of insider trading, while other shareholders were buying stock at artificially inflated prices.

The suit cites specific share price fall in response to news of Lehman’s exposure to the credit market meltdown and the downgrades of the stock as per market analysis, and the lowering of Lehman’s credit rating by Moody’s and Standard & Poor’s. It also gives examples of repeated reassuring statements made by Lehman senior management in connection with quarterly earnings reports that paint a rosy picture of the company’s financial health.

Source:Forbes.com

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