SEC Probes More Than 20 Banks On Repo 105
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The Securities and Exchange Commission announced on Monday that more than 20 large financial and insurance institutions are being looked at for possibly conducting repurchase agreements, as the agency is looking to strategies by firms that were looking to hide losses.
The move from the SEC comes after the Lehman Brothers Holdings Inc. allegedly masked roughly $50 billion in debt through repurchase agreements before collapsing in 2008.
A technique called Repo 105 was used by Lehman to hide some of its risky trading activity.
The chairman of the SEC, Mary Schapiro has said recently that the agency is looking into other financial institutions that may have possibly used similar masking measures.
Letters sent by the SEC to the chief financial officers of numerous large financial institutions asking for details about possible repurchase agreements that qualify for sales accounting and a detailed summary of how the transactions could have been counted as sales.
Specifically the SEC asked for information from the firms about how original accounting of repurchase agreements in recent years may have impacted their financial statements.
Schapiro said recently that the agency will investigate signs of misleading or inappropriate accounting techniques found by the investigations.
A copy of the letter sent out in mass to financial CFOs will be made public shortly by the SEC and companies that have received the letter will have 10 business days to respond.
The move from the SEC comes after the Lehman Brothers Holdings Inc. allegedly masked roughly $50 billion in debt through repurchase agreements before collapsing in 2008.
A technique called Repo 105 was used by Lehman to hide some of its risky trading activity.
The chairman of the SEC, Mary Schapiro has said recently that the agency is looking into other financial institutions that may have possibly used similar masking measures.
Letters sent by the SEC to the chief financial officers of numerous large financial institutions asking for details about possible repurchase agreements that qualify for sales accounting and a detailed summary of how the transactions could have been counted as sales.
Specifically the SEC asked for information from the firms about how original accounting of repurchase agreements in recent years may have impacted their financial statements.
Schapiro said recently that the agency will investigate signs of misleading or inappropriate accounting techniques found by the investigations.
A copy of the letter sent out in mass to financial CFOs will be made public shortly by the SEC and companies that have received the letter will have 10 business days to respond.
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