Lehman Bros Code of Ethics, The History of Lehman Brothers (Essay Sample)
The History of Lehman Brothers
Lehman Brothers trace their roots back to a general store founded by German immigrant Henry Lehman in Alabama in 1844. Just six years later, Henry Lehman and his brothers founded Lehman Brothers. The firm prospered over the following decades as the U.S. economy grew into an international powerhouse and faced plenty of challenges over the years, including: railroad bankruptcies, the Great Depression, two world wars, a capital shortage caused by a spin off by American Express Co. (AXP), and the Long Term Capital Management collapse and Russian debt default in the late 1990s.
The Disastrous Misstep
In the early part of the 21st century Lehman acquired five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans (made to borrowers without full documentation). At first Lehman's real estate businesses enabled revenues in the capital markets unit to surge at a faster rate of growth than other businesses in investment banking or asset management.
Lehman Bros Code of Ethics
Respond: Were the actions of the leadership at Lehman Brothers within the letter and spirit of their company's ethical code? Given the fallout we've seen from Enron, Nortel, and Lehman Brothers what must we do differently in the future? How can we structure and communicate expectations for ethical conduct more successfully?
Were the actions of the leadership at Lehman Brothers within the letter and spirit of their company's ethical code?
While the leadership at Lehman Brothers was expected to maximize value for the shareholders, they failed to report on exposure to risk assets and subprime mortgages. The leaders seemed to shift the blame to the regulators, and failed to acknowledge that their practices triggered the global financial crisis. Overleveraging is a risky move that resulted in huge losses the investor
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