Friday, 25 July 2014
Last updated 38 min ago
Oct 9 2012 | 12:58pm ET
It's taken more than four years, but Lehman Brothers' prime-brokerage customers are to be paid in full following an agreement between the bankrupt investment bank and its European arm.
Lehman trustee James Giddens struck a deal with the liquidators of Lehman Brothers International Europe; disputes over liabilities had kept hedge funds' money frozen at the latter, which housed Lehman's prime brokerage unit.
"This is a critical milestone for customers because, if approved by the court, the agreement sets the stage for distributions that will provide for 100% recovery of customer property," Giddens said. "The agreement resolves tens of billions in claims from LBI's largest single customer claimant and will allow for customer and creditor distributions much sooner than if LBIE's claims involving hundreds of thousands of transactions were litigated."
It is unclear when, and how much, hedge funds and other clients would be paid.
"The size and timing of distributions depend on finalizing this agreement in principle, due process for all parties and court approval," Jake Sargent, a spokesman for Giddens, said.
The fate of Lehman's prime brokerage billions were muddied by what a British called LBIE's "spectacular" failure to properly segregate client assets.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…