The document summarizes the bankruptcy of Lehman Brothers, the largest bankruptcy in history. It provides background on Lehman Brothers and how they grew to become a major global financial firm primarily focused on real estate and mortgage-backed securities. It then describes how Lehman Brothers hid over $50 billion in loans, massively overleveraged themselves, and ultimately went bankrupt during the financial crisis in 2008. Their bankruptcy had massive ripple effects globally and cost millions of people their jobs and investments. Investigations into their accounting practices continued after the bankruptcy.

1. Submitted To:- Mr. Mahavir Narwal
Submitted By:- Akshay(16)
Mandeep(25)
Divya(28)
Geeta(30)

2. Intro. of
Lehman brothers
Their bankruptcy Their scandal

3. Lehman brothers was a global financial services firm. It was founded in 1850. It was
doing business in investment banking, investment management. The firm was the 4th
largest investment bank in the united states.
They had headquarters in New York City.

4. Founders of Lehman brothers
Henry Lehman Emanuel Lehman Mayer Lehman

5. video

6. The seed of bankruptcy
Year 2003-04

7. Alt A
Lenders
Sub
prime

8. REAL ESTATE HEDGEINVESTMENT BANK
Morphed into a real estate hedge

9. Total asset to equity ratio of Lehman
brothers

10. Subprime Mortgage
Crisis
Feb. 2007

11. Reason behind the bankruptcy
•Too much investment in Mortgage related securities.
•Sub Prime Mortgage Crisis
•Very high Leverage Ratio.

12. 15
Sept.
2015

13. Top ten bankruptcy

15. Lehman Brothers
Scandal

16. video

17. Hid over $50
billion in loans by
showing them as
sales at the end of
each quarter
What was scandal ?

18. The trick made Lehman Brothers
look much healthier — on paper,
at least. These guys were
desperate to fool investors and
credit rating agencies. They had
screwed up on a truly colossal
scale, and lined their pockets all
the while.
Reason for the scam

19. How they did it
They was able to
manipulate the books by
using “Repo 105”.
Repo (repurchase options)105:-An accounting trick in which a
company classifies a short-term loan as a sale and subsequently uses the
cash proceeds from said sale to reduce its liabilities.

20. How they got caught?

21. Who was involved?
Chief Financial Officer (CFO)Erin Callan
Auditor, Ernst & Young
Chief Executive Officer (CEO)Richard Fuld

23. 1. This was the
largest bankruptcy
in the entire
world, so basically
everyone got
affected

24. 3. Cost of borrowings also
increased
2. Less profits of U.S based
companies

25. 6. millions of investors lost all or
almost all of their money
4. Almost 6 million jobs were lost all over world
5. Unemployment rate almost doubling to
10 %

26. 7. Reduced global market value by $10
trillion in market capitalisation
8. Intensified the downturn that
started in late 2007 created from
the sub prime mortgage

27. 9. Popular index DOW JONES fell by
5000 point

28. Action taken against this
scandal

29. Action taken against Lehman
brothers 1. The Lehman brothers are
still under investigation and
analysis
2. No action have been taken
against the Lehman brother
as of today due to lack of
evidence

30. Action taken against Ernst &
young
1. Ernst &young was sued by New York supreme
court because they are believed to be responsible for
hiding the Lehman brothers’
2. Ernst & young was sued for a some of about
150million dollars for helping the Lehman brothers.
3. On 15 April 2015 the attorney general said that the
Ernst $ young will pay 10 million dollars .

31. 1. On September 20 ,2008 the Barclays acquired most of Lehman's
north America operation for 1.3 billion dollars.
2. Nomura holdings Japan's top brokerage firm agree to buy Asia
divisions of Lehman brother for 225 millions.
3. The Lehman Brothers are still a corporation today with roughly 300
employees and is trying to pay off its debt
4. As of January 2016, Lehman brother already pay 105 billions dollar
to his unsecured creditor
What happened to the Lehman Brothers

32. Impact on Indian economy

33. 1. Impact on BSE Sensex

34. 2. ICICI Bank was the hardest
hit

35. 3. Impact India's GDP growth
4. Impact on India's exchange rate

36. 5. Impact on reserve bank

37. How to avoid
1. Screen applicants thoroughly before hiring them.
2. Implement internal controls to reduce fraud risk.
3. Comparative financial statement must be used
4. Consider annual audits
5. Financial statement check