Lehman Prime Customers To Get All Money Back

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.


In Depth

Fund Focus: Asian Frontier Capital Offers U.S. Investors Access To Untapped Markets

Mar 2 2015 | 6:47am ET

Hong-Kong based asset manager Asian Frontier Capital is making a capital raising...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Risk: How To Get In Front Of The Problem

Feb 26 2015 | 9:53am ET

In considering the topic of risk in the hedge fund world, specifically, the oversight...

 

Editor's Note