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

Bob Doll's Ten Market Predictions For 2016

Jan 7 2016 | 9:37pm ET

Well-known market strategist Robert Doll has published his annual list of ten predictions...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedge Fund Marketing - Making the Most of Your Salesperson

Jan 20 2016 | 8:11pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth takes a close...