Lehman's Collapse, Stock Sale Probed by Three U.S. Prosecutors (Linda Sandler, Christopher Scinta)

Oct. 18 (Bloomberg) -- Lehman Brothers Holdings Inc. is the subject of three federal criminal probes and at least 12 subpoenas of individuals to testify before grand juries, according to a lawyer for the bank that last month filed the largest bankruptcy in history. 

Lead Lehman bankruptcy lawyer Harvey Miller said Oct. 16 in federal court in Manhattan that the investigations were launched by New York U.S. attorneys in Brooklyn and Manhattan as well as in Newark, New Jersey. They are focusing in part on Lehman's role in the $330 billion auction-rate securities market and possible crimes associated with its $6 billion June stock issue, according to a person familiar with the case who requested anonymity. {xtypo_quote_right} "They'll be looking for any misrepresentation by the heads of the divisions or anyone working for them," said Patton Boggs lawyer Todd Harrison. "For an indictment, the misrepresentation has to be material and you need to show that investors relied on it to invest more money or keep money in." {/xtypo_quote_right}

"It's clear they have given it some urgency and priority," former Justice Department attorney Robert Plotkin said. "Given the notoriety and the headlines, this would be one of the ones that would be on a faster track," said the lawyer, who now handles white-collar defense cases at Richmond, Virginia-based McGuireWoods.

The demise of Lehman, which sought court protection Sept. 15, accelerated a global credit crisis that has wiped out $30 trillion of equity value in the past year. The U.S. has begun investigations of mortgage lending, securitization and failed banks including New York-based Lehman. The Federal Bureau of Investigation is looking into 26 firms, including American International Group Inc., a senior law-enforcement official said.

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