Lehman

NEW YORK (CNNMoney.com) -- Failings by Lehman Brothers executives and its auditor led to the bank collapse that unleashed the worst of the financial crisis, according to a report by a U.S. bankruptcy court-appointed examiner.

Lehman "repeatedly exceeded its own internal risk limits and controls" and a wide range of bad calls by its management led to the bank's failure, the report says.

The conduct of Lehman executives "ranged from serious but non-culpable errors of business judgment to actionable balance sheet manipulation," the report by examiner Anton Valukas says.

Valukas, of New York law firm Jenner & Block, was appointed in January of last year to examine the causes of Lehman's failure by the U.S. Bankruptcy Court for the Southern District of New York.

The fall of a Wall Street highflier
Lehman's bankruptcy filing on Sept. 15, 2008 -- the largest Chapter 11 filing in financial history -- capped a 95% slide in the firm's stock price and unleashed a crisis of confidence that threw financial markets worldwide into turmoil, sparking the worst crisis since the Great Depression.

As a credit squeeze caused investor confidence to falter in the fall of 2008 Lehman tried to stave off collapse by painting a misleading picture of its financial condition, the report claims.

In particular, it criticizes Lehman's failure to disclose its use of what it called "Repo 105" transactions to manipulate its balance sheet.

The use of these transactions were not adequately challenged or questioned by its auditor Ernst & Young, according to the report, which runs more than 2,200 pages.

The report is highly critical of Lehman's executives. It says: "Lehman should have done more, done better."

But it says responsibility for its collapse is shared. A flawed business model that rewarded excessive risk and leverage exacerbated the bank's problems, as did government agencies.

Lehman's plight "was more the consequence than the cause of a deteriorating economic climate," Valukas wrote.