According to Reuters, the suit, which seeks class action status and names Operative Plasterers and Cement Masons International Association Local 262 Annuity Fund as lead plaintiff, accuses Lehman executives of making deliberately misleading statements and withholding material information in order to profit by selling company stock at artificially inflated prices. The four executives named in the suit are Chief Executive Richard Fuld, former chief financial officer and head of risk management Christopher O’Meara, and Joseph Gregory and Erin Callan, who last week were demoted from their positions as chief operating officer and CFO.
The complaint says the four possessed the power and authority to control the content of Lehman Brothers’ reports to securities regulators, company press releases, and presentations to the investment community. In addition, Fuld, Gregory, and O’Meara are accused 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, Reuters said.
The suit, filed on behalf of those who purchased or acquired Lehman Brothers common stock between Sept. 13, 2006, and June 2008, asks for a jury trial and seeks damages of an amount to be proven at trial, plus interest, attorneys’ fees and costs, and other relief as the court deems appropriate.
Lehman Brothers shares have plunged more than 60% this year as a result of its exposure to the sub-prime mortgage crisis, the news report said.