Custodian Hit With New Lawsuit After Losing Lehman Appeal

May 14 2010 | 1:13am ET

If RBC Dexia thought its legal battle with three hedge funds over the Lehman Brothers collapse was unhappily over, it was even more unhappily wrong.

RBC Dexia lost its fight with the hedge funds, which accused the custodian of responsibility for their losses when Lehman Brothers went bankrupt a year-and-a-half ago. The firm was found liable, losing its final appeal last week.

Now one of the hedge funds, Paris-based Delta Alternative Management, is back for more. Delta has sued RBC Dexia again, seeking “damages” it suffered in the battle with its one-time custodian, Financial News reports.

RBC Dexia was forced to repay the hedge funds for the assets lent to Lehman, believed to be about €13 million. The firm had argued that it should be allowed to return the assets after they had been recovered from the bankrupt bank.

“This decision imposes a much higher level of liability for the non-restitution of assets held by third parties than that which is generally in force in other EU countries,” an RBC Dexia spokesman told FN. “RBC Dexia believes that it is important that the European rules be equitable to all parties, while ensuring a high level of investor protection.”

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