[JURIST] Lehman Brothers [corporate website] Chairman and Chief Executive Officer Richard Fuld [corporate profile] Monday called for a new regulatory scheme for financial firms in testimony before the US House Committee on Oversight and Government Reform [committee website]. Fuld answered questions regarding Lehman Brother's role in the current financial crisis and the the high levels of executive compensation at the firm in the run-up to its Chapter 11 bankruptcy filing [bankruptcy petition, PDF; affidavit, PDF] and disputed lawmakers' suggestions that Lehman Brothers managers defrauded investors by making public statements at odds with Lehman's internal financial health. In a prepared statement [text, PDF], Fuld said:

We now have the opportunity to create a new regulatory system and “best practices” for a functioning and orderly market. These new approaches must encourage rather than impede global investment in our capital markets. Shifting and inconsistent rules create a capital markets system that does not give confidence to investors or participants. We need a single set of transparent rules for all of the participants in order to have a fair and orderly market. We must stick to these rules and enforce them evenly, not selectively, or our great capital markets will not be attractive to investors. A loss of investment in our markets would have far-reaching consequences for this country and the American people.

Also on Monday, the Wall Street Journal reported that US Attorneys offices in New York and New Jersey are investigating whether Lehman Brothers misled investors [Wall Street Journal report] prior to its bankruptcy filing. The New York Times has more. The Washington Post has additional coverage.

Lehman Brothers is one of the largest financial institutions to be stricken by the ongoing financial crisis. Last Friday, the House passed a $700 billion financial rescue bill [JURIST report] in an attempt to limit the effects of the crisis on the larger US economy and international markets. Last month, members of Congress spoke out [JURIST report] about regulatory changes and investigations following a stock market drop propelled by Lehman Brothers' Chapter 11 bankruptcy filing and the sale of Merrill Lynch [AP report]. Speaker of the House Rep. Nancy Pelosi (D-CA) reiterated [press release] plans for a new economic stimulus package designed to "create jobs and address some of the most immediate consequences of the Administration’s serious mismanagement of our economy." Senate Banking, Housing and Urban Affairs Committee Chairman Sen. Chris Dodd (D-CT) [official website] said [statement text] that the Banking Committee will continue to probe regulatory oversight and seek legislative solutions "strengthening the housing sector, developing a second stimulus package, and restructuring the regulation of the financial sector.”