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

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Star Mountain Capital: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of