Revised Lehman Stock Drop Suit Unsealed

Ex-Lehman Brothers CEO Richard Fuld and other Lehman executives kept their use of Repo 105, a method of financing designed to hide billions of dollars in debt, a secret, according to a stock-drop lawsuit.

A Bloomberg news report said a revised version of the suit was filed under a court seal in September but ordered opened November 30. The original complaint was filed in 2008.

According to the Bloomberg report, the 401(k) plan had $228.7 million invested in the Lehman Brothers Stock Fund, which had 10.6% of its assets in Lehman shares trading at $65.44 each on December 31, 2007, the lawsuit said. The company’s benefits committee liquidated the fund nine months after Lehman went bankrupt in September 2008 and its stock was worthless, the suit said.

According to the suit, Fuld and other executives “knew or should have known” about Repo 105 and other risks taken by Lehman, and should have known plan assets should not have been invested in company stock.

The lawsuit is In re Lehman Brothers ERISA Litigation, 08- cv-05598, U.S. District Court, Southern District of New York.