Securities: New Jersey Sues Former Lehman Executive and Directors

The state of New Jersey has filed a law suit in New Jersey state court alleging fraud by the former executives and directors of the now bankrupt Wall Street firm Lehman Brothers. The complaint alleges that Lehman's executives misstated the firm's financial position in 2008, leading the state to make investments in Lehman's shares during that time.

The suit alleges that the state invested $182 million in Lehman stock during the period when the management of the company was making false public claims about the valuation of Lehman's assets and that the firm was liquid. Moreover, the complaint alleges false statements about Lehman's ability to manage its investment risk.

New Jersey also names directors of Lehman in its suit, alleging that the board was a hand picked rubber stamp for management's decisions, thus, failing to exercise supervision over management. The suit names the executives and directors and not Lehman Brothers itself because the company is in bankruptcy, which stays all litigation against it.