When the evidence was not clear-cut in the wake of the 2008 financial meltdown, federal prosecutors hesitated to charge top Lehman Brothers executives, and in the end opted not to pursue the cases despite internal disagreement, The New York Times reported.

Federal prosecutors and the Securities and Exchange Commission (SEC) never officially announced their decision to close the investigation into Lehman Brothers, whose business failure was a linchpin in the events that almost brought down the U.S. financial system.

But The Times said the investigations appear to be over, and the deadline for filing most charges expires this month, the fifth anniversary of Lehman's collapse.

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Mary Schapiro, SEC chairwoman from 2009 until 2012, disagreed with the SEC staff decision not to pursue the Lehman case, The Times noted. Prosecutors and FBI agents had already decided not to pursue a parallel criminal case.

According to The Times, Schapiro predicted in 2011 "the world won't understand" a decision to let Lehman off the hook.

But the SEC staff, led by George Canellos, who headed the SEC New York office, argued that whether Lehman omitted "material" information to investors was not material to the case.

Canellos' team concluded Lehman CEO Richard Fuld was unaware Lehman was using questionable accounting practices despite testimony from another Lehman executives that suggested otherwise, The Times reported.

The SEC's decision disagreed with a report by Lehman's bankruptcy examiner, who accused executives of using an accounting trick to "manipulate" the balance sheet, according to The Times.

"There were many instances where the SEC had information and didn't act," said Anton Valukas the bankruptcy examiner. In his report, Valukas outlined accounting maneuvers he called "balance sheet manipulation."

The Times examination showed SEC officials pored through more than 15 million Lehman documents and interviewed about three dozen witnesses before reaching its decision not to pursue the case.

In the wider investigation of multiple banks and financial companies following the 2008 crisis, the SEC has brought civil cases against 66 senior executives and reached nine-figure settlements from banks such as Goldman Sachs.

"When the evidence is murky, prosecutors sometimes hesitate to charge top executives, who have the money to fight rather than settle," The Times said.

By early 2011, the SEC's team had run out of leads, according to The Times. It decided not to sue Lehman because the firm was already in bankruptcy, and also decided not to sue Fuld for allegedly failing to supervise the firm's risk taking on the grounds the agency lacked authority to do so.

The SEC's conclusion not to pursue the case "set off a wave of dissent inside the SEC," The Times stated. "Senior accountants and the head of the SEC unit that oversaw corporate disclosures questioned the findings. Mr. Schapiro urged Mr. Canellos to keep digging."

However, Canellos told colleagues at one meeting that they could not bring a case against Lehman if the evidence was lacking.

Harvey Miller, a partner at the New York law firm that continues to administer Lehman's bankruptcy proceedings, told Bloomberg TV that estimated legal fees in the case total about $2 billion, and that $80 billion in assets will be recovered.

Lehman creditors will probably receive about 20 percent of their claims, Miller estimated, noting that the case is the largest corporate bankruptcy in history.

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