Lehmans admits plagiarising rival's research

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As if Lehman Brothers did not have enough to contend with trying to rebuild its battered balance sheet, the beleaguered investment bank risks losing its place as the top-rated Wall Street research firm because of a plagiarism scandal.

The bank's equity research division has issued an apology to its clients and admitted lifting large chunks of research from a rival bank publication.

A 60-page tome on the semiconductor industry contained a chapter and charts that "closely resembled" earlier reports by Toni Sacconaghi, an analyst at Sanford C Bernstein, an independent research firm, Lehman said. "The material was not sourced to Bernstein and was used without the firm's permission," it wrote in a letter to clients.

The publication, produced in March by a team of analysts under Tim Luke, has been taken down from Lehman's website. Sources said the researcher who lifted the material is no longer employed there.

For five years, Lehman Brothers has ranked first in the widely followed and hard-fought Institutional Investor survey of research analysts. Bernstein was seventh in 2007. Mr Sacconaghi was top-rated in the IT hardware category last year, while Mr Luke was a runner-up in three categories. The 2008 awards are to be decided in October, based on a survey of fund managers who receive equity research.

Bernstein said yesterday: "We thank Lehman for setting the record straight and giving our firm and analysts full credit for their work."

Lehman said it investigated the incident as soon as it came to light, but it could not have come at a worse time, since the firm is already seen as the sick man of Wall Street. Battered by billions of dollars of losses on mortgage-related securities, and with the turmoil in credit markets shrinking its core bond business, the company is engaged in a fire sale of assets to restore the confidence of investors.