WASHINGTON, March 29 (Reuters) - U.S. securities regulators are demanding detailed reports from major financial firms in an attempt to uncover any accounting tricks like the 'Repo 105' method Lehman Brothers used to mask its losses.
Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said on Monday that the agency would be probing every major financial institution over the coming weeks.
'We want to make sure both their accounting and disclosures are accurate when it comes to how they're characterizing repurchases,' Schapiro said in an interview with CNBC.
Earlier this month, a court-appointed examiner found that Lehman used Repo 105 for the sole purposes of manipulating its books and helping hide that it had been insolvent for weeks before its collapse in September 2008.
The accounting gimmick involved a series of short-term transactions similar to repurchase or repo deals, which entail selling assets and agreeing to buy them back in the future.
The Repo 105 transactions allowed Lehman to temporarily remove $50 billion of assets from its balance sheet in 2008.
When asked if firms besides Lehman have used Repo 105, Schapiro said that was what the SEC's probe is designed to find out.
'We'll be getting very detailed reporting and information from financial institutions about how they've accounted for and disclosed their refinancing or their sales under repos,' she said.
(Reporting by Karey Wutkowski; Editing by Lisa Von Ahn) Keywords: SEC PROBE (E-mail:karey.wutkowski@thomsonreuters.com +1 202 898 8374) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said on Monday that the agency would be probing every major financial institution over the coming weeks.
'We want to make sure both their accounting and disclosures are accurate when it comes to how they're characterizing repurchases,' Schapiro said in an interview with CNBC.
Earlier this month, a court-appointed examiner found that Lehman used Repo 105 for the sole purposes of manipulating its books and helping hide that it had been insolvent for weeks before its collapse in September 2008.
The accounting gimmick involved a series of short-term transactions similar to repurchase or repo deals, which entail selling assets and agreeing to buy them back in the future.
The Repo 105 transactions allowed Lehman to temporarily remove $50 billion of assets from its balance sheet in 2008.
When asked if firms besides Lehman have used Repo 105, Schapiro said that was what the SEC's probe is designed to find out.
'We'll be getting very detailed reporting and information from financial institutions about how they've accounted for and disclosed their refinancing or their sales under repos,' she said.
(Reporting by Karey Wutkowski; Editing by Lisa Von Ahn) Keywords: SEC PROBE (E-mail:karey.wutkowski@thomsonreuters.com +1 202 898 8374) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.