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Probe reportedly is examining whether execs made misleading statements about health of company, which collapsed in the wake of the subprime lending debacle; in related news, AIG says it will cancel many events after being caught sponsoring lavish getaways — even as the firm drew billions in government rescue funds

NEW YORK
Lehman Brothers, one of the investment banks at the heart of one of the biggest financial-ethics stories in recent history, is the subject of at least three federal criminal investigations, according to press reports last week.

Richard Fuld, Jr., Lehman’s former chairman and CEO, and Erin Callan, its former CFO, have been subpoenaed in the case, reports the Washington Post, citing unidentified sources.

Spokesmen for prosecutors and Lehman declined comment and lawyers for Fuld and Callan did not immediately respond to the Post story.

The Post says three grand juries are investigating the collapse of Lehman Brothers, which in September filed the largest bankruptcy claim in U.S. history.

The Dow Jones News Service reports that the probes appear to center on whether Lehman executives made false statements about the fiscal health of the firm shortly before its downfall.

In related news, American International Group (AIG), another casualty of the world financial crisis brought on by the collapse of mortgage-backed securities, last week agreed to cut back on spending for junkets, executive perks, and compensation for high-ranking employees, CNN reports.

AIG, which tapped into more than $120 billion in government aid after it could not cover losses on insurance-like products that it offered to investors, drew fire from Congress after it was discovered that even as it was drawing on a taxpayers’ rescue funds, it was holding events at lavish resorts, according to CNN.

Following the revelations, AIG said it would immediately cancel more than 160 planned events, including a $750,000 conference in Las Vegas, according to ABC News.

Sources: Washington Post, Oct. 18 — Dow Jones News Service, Oct. 18 — ABC News, Oct. 16 — CNN, Oct. 16.

For more information, see: Related Newsline story, Oct. 14 — Related Newsline Commentary, Oct. 6 — Related Newsline story, Oct. 6 — Related Newsline Commentary, Sep. 29 — Related Newsline story, Sep. 29.