U.S. securities regulators are demanding detailed reports from major financial firms in an attempt to uncover any accounting tricks like the "Repo 105" method Lehman Brothers used to mask its losses.
Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said on Monday that the agency would be probing every major financial institution over the coming weeks.
"We want to make sure both their accounting and disclosures are accurate when it comes to how they're characterizing repurchases," Schapiro said in an interview with CNBC.
Earlier this month, a court-appointed examiner found that Lehman used Repo 105 for the sole purposes of manipulating its books and helping hide that it had been insolvent for weeks before its collapse in September 2008.
The accounting gimmick involved a series of short-term transactions similar to repurchase or repo deals, which entail selling assets and agreeing to buy them back in the future.
The Repo 105 transactions allowed Lehman to temporarily remove $50 billion of assets from its balance sheet in 2008.
When asked if firms besides Lehman have used Repo 105, Schapiro said that was what the SEC's probe is designed to find out.
"We'll be getting very detailed reporting and information from financial institutions about how they've accounted for and disclosed their refinancing or their sales under repos," she said.
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