Its being touted as jurisdiction shopping, but Lehmans use of the Repo 105 accounting rule cant be explained away as a legal technicality. It goes to the heart of legal culture in the UK.
This isnt a question of whether something is illegal under US law but not under English law, said one lawyer that IFLR spoke to. Its a question of whether its valid to write an abstract opinion on a very narrow point of law that is then going to be used in a wider context.
The report that sparked the controversy was written by examiner Anton Valukas of law firm Jenner & Block, and commissioned by the New York bankruptcy court. It draws attention to Lehman Brothers' use of an accountancy loophole known as Repo 105, which allowed the bank...