Read the attached case, Lehman Brothers' Fall, and answer the following questions.

$1.$ Lehman reported its repurchase transactions as sale transactions. Why and how did that impact its balance sheet?

To answer these questions, look at Exhibit $2$ in the case and first consider a hypothetical company that has a balance sheet total of $$1,000,$ of which liability is $$800$ and equity is $$200.$ Now suppose, in the quarter end the company wants to pay off its current liability of $$400.$ It borrows $$400$ and receives cash of the same amount. This increases its liability and cash. Then, it uses the same cash and pays off the current liability.

Next, assume the same position of the company as given above. Now, collaterals of $$400$ are sold to another party. The cash moves into the business and the assets moves out, which means an exchange of assets takes place. The cash is then used to pay off the liability. This was the Lehman's practice

Now, based on the two hypothetical accounting treatments, fill in the following two tables.

Table $1$A: Accounting Treatment of Loan Repayment: Standard Practice

Assets

Old Liabilities

New Liabilities

Shareholders$$ Equity

Equity as a $\%$ of Total Assets

Balance Sheet before Loan

Loan of $400$

Balance Sheet before using Loan Proceeds

Cash used to pay off Loans

Balance Sheet after paying off Loans

Table $1$B: Accounting Treatment of Loan Repayment: Lehman's Practice

Assets

Old Liabilities

New Liabilities

Shareholders$$ Equity

Equity as a $\%$ of Total Assets

Balance Sheet before Loan

Sale of $400$ worth Collaterals

Cash Received

Balance Sheet before using Loan Proceeds

Cash used to pay off Loans

Balance Sheet after paying off Loans

Next, based on the case and Exhibit $4,$ fill in the following table.

Table $2$: Lehman's Balance Sheet: With an Without Repo for the Three Quarters before its Collpase

Amounts in US$ Billion

As percent of Assets

Assets

Liabilities

Shareholders$$ Equity

Assets

Liabilities

Shareholders$$ Equity

Percent Increase in Shareholder$$s Equity

November $2007$

November $2007$

Without Repo

Without Repo

With Repo

With Repo

February $2008$

February $2008$

Without Repo

Without Repo

With Repo

With Repo

May $2008$

May $2008$

Without Repo

Without Repo

With Repo

With Repo

Analyze and interpret the three tables and answer the questions above.

$2.$ Forum shopping occurs when there is a combination of an inducement to go to a foreign forum $($i$.$e$.,$ foreign jurisdiction$)$ and an opportunity for the plaintiff to bring proceedings there. It also known as "regulatory arbitrage," and many bankers would do it$.$ Can we say that Lehman indulged in forum shopping? If yes, whose help would Lehman have possibly taken to this?

$3.$ How can regulators in different jurisdictions close such gaps?