The Times doesn’t push back on the London angle. Nor does it push back on the insane SEC PR that the Repo 105 fraud wasn’t “material” to investors, reporting this:

The S.E.C. team also concluded that Repo 105 would not have been “material” to investors because the firm’s leverage ratio was trending downward regardless of Repo 105.


First, an accounting scam does not have to “cause” a “failure” to be a crime or a violation of rules. Accounting frauds are frequently undertaken to cover up the failing firm’s problems. That is why Lehman engaged in the REPO 105 scam. So the first sentence was fed to the NYT reporters for the purpose of deceiving the reader. REPO 105 is an obscure accounting rule - that does not mean that Lehman was allowed to use it to deceive investors. I’ve explained why the desperate search by Lehman’s officers for an attorney willing to give them the opinion they were shopping to obtain. The attorney shopping actually confirms that Lehman’s officers intent to deceive investors.

The SEC’s line here makes you question whether they’re simply incompetent or willfully dishonest. Why would Lehman have used chicanery like Repo 105 if not to make itself look stabler than it really was? What other purpose was there? How, after being turned down by multiple legal laundries law firms in the US unwilling to provide it cover, could Lehman not know that it shouldn’t have been doing Repo 105?

No pushback from the Times here, either.

And it gives the kicker to Canellos, who portrays himself valiantly fighting off “political pressure” to unjustly charge innocent Lehman execs:

But Mr. Canellos, a former federal prosecutor who is now the co-head of the S.E.C.’s enforcement unit, did not budge. Despite the political pressure, he told colleagues at one of the meetings, they could not bring a case if the evidence was lacking.

“Our job is to seek justice,” he said.

Perhaps Canellos, who’s now co-head of enforcement at the SEC, deserves his own glowing DealBook profile like his mega-conflicted predecessor Robert Khuzami.

Khuzami, naturally, took Canellos’ side on not charging Lehman.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.