Third Amended Complaint - Lehman Brothers Securities Litigation

were temporarily removed from Lehman’s financial statements. Had the Repo 105 transactionsbeen included, Lehman’s net leverage ratio would have been 17.8, representing an increase 17 timesgreater than Lehman’s own materiality threshold of a change in net leverage of 0.1.49. In addition, the 3Q07 10-Q reported $169.302 billion in securities sold underagreements to repurchase. This statement was materially false and misleading because it excludedover $36 billion in Repo 105 assets that Lehman had temporarily removed from its balance sheet,which Lehman had agreed to repurchase days after the end of the quarter.50. FY2007: On January 29, 2008, Lehman filed with the SEC its annual report onForm 10-K for the fiscal year ended November 30, 2007 (“2007 10-K”) (which largely repeatedinformation in its December 13, 2007 Form 8-K), signed by Fuld, Callan, Ainslie, Akers, Berlind,Cruikshank, Evans, Gent, Hernandez, Kaufman, and Macomber.51. The 2007 10-K reported that Lehman’s net leverage ratio was 16.1, which wasmaterially misleading because it failed to take into account $38.634 billion in Repo 105 assets thatwere temporarily removed from Lehman’s financial statements. Had the Repo 105 transactionsbeen included, Lehman’s net leverage ratio would have been 17.8, representing an increase 17 timesgreater than Lehman’s own materiality threshold of a change in net leverage of 0.1.52. In addition, the 2007 10-K reported $181.732 billion in securities sold underagreements to repurchase. This statement was materially false and misleading because it excludedalmost $39 billion in Repo 105 assets that Lehman had temporarily removed from its balance sheet,which Lehman had agreed to repurchase days after the end of the quarter.53. 1Q08: On April 8, 2008, Lehman filed with the SEC its quarterly report on Form10-Q for the first quarter ended February 29, 2008 (“1Q08 10-Q”) (which largely repeatedinformation in its March 18, 2008 Form 8-K), signed by Callan and incorporated by reference intothe offerings, as set forth in Appendix A.54. The 1Q08 10-Q reported that Lehman’s net leverage ratio was 15.4, which wasmaterially misleading because it failed to take into account $49.102 billion in Repo 105 assets that-16-