The amended class-action suit alleges that through its stockoffering materials, Lehman failed to disclose that it used Repo 105transactions to temporarily reduce its net leverage ratio at theend of each quarter, that the Repo 105 transactions "had the effectof materially understating" the firm's liquidity risk, that Lehmandisregarded its own risk limits and that the firm overstated thevalue of its commercial real estate assets. These assets includedthe $22-billion acquisition of Archstone-Smithwith Tishman Speyer Properties in 2007—an acquisition that putLehman "clearly in excess of its established risk limits," the suitalleges, quoting the report by bankruptcy examiner AntonValukas.

In the commercial real estate sphere, Lehman failed to disclose"adequately or meaningfully" its risk concentrations in "highlyrisky Alt-A loans, illiquid commercial real estate assets andleveraged loan commitments," the lawsuit alleges. "In addition, theoffering materials failed to disclose that Lehman had heavyconcentrations of illiquid assets, such as residential andcommercial real estate with deteriorating values."

Between the end of its fiscal 2006 and the end of its fiscal2007, "Lehman increased its global CRE assets by more than 90%,from $28.9 billion to $55.2 billion," according to the complaint.Yet by July '07, the company's personnel "had already recognizedthat the market for placing investments backed by commercial realestate was 'virtually closed' and that the leveraged loan markethad shut down."