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SEC to Probe Uses of Repo 105

|Includes: Lehman Bros Hld (LEHMQ)

James Politi at ft.com reports that the SEC is investigating whether more that 20 financial firms used the same process that Lehman Brothers (LEHMQ.PK) used to conceal approximately $50 billion from its balance sheet in the months before bankruptcy in September 2008.  Using this subterfuge enabled Lehman to hide extreme leverage which eventually brought it down.

The Repo 105 process was one of the problems uncovered by bankruptcy court examiner Anton Valukas, reported on here.

One has to wonder how the SEC can be expected to conduct a meaningful investigation.  After all, this is the agency that found nothing wrong with Bernie Madoff's operation after receiving repeated reports that something was amiss.

I guess we'll just have to wait and see if anything comes out of this.

Disclosure: No positions.