SIPC: Lehman Agreements To Result In Billions Of Dollars In Additional Customer, Creditor Distributions

Feb 26, 2013, 16:44 ET from Securities Investor Protection Corporation, Washington, D.C.

If Approved, LBI Customers Will Be Made Whole; Billions of Dollars in Remaining LBIE and LBHI Creditor Claims Resolved

WASHINGTON, Feb. 26, 2013 /PRNewswire-USNewswire/ -- Customers and creditors will be the beneficiaries of the resolution of billions in intercompany claims under two sets of agreements, one between the Lehman Brothers Inc. (LBI) Trustee and Lehman Brothers Holdings Inc. and certain of its debtor and non-debtor subsidiaries (LBHI) and the other between the LBI Trustee and the Joint Administrators Lehman Brothers International (Europe) (LBIE).

Under the agreements, securities customers should receive full satisfaction of their claims and distributions from the general estate will be facilitated, according to James W. Giddens, Trustee for the liquidation of LBI under the Securities Investor Protection Act (SIPA).

The Securities Investor Protection Corporation (SIPC) today applauded the hard work of Trustee Giddens and his attorneys to reach the agreements and avoid time consuming and costly litigation that would have held up the return of customer property.

The resolutions unlock value of the LBI estate, reducing LBIE customer claims from approximately $24 billion to approximately $8 billion which can be returned to LBIE's underlying Omnibus claimants, and reduce LBHI customer claims from approximately $19.9 billion to approximately $2.3 billion.

The agreements also contribute significantly to recoveries for LBI's general creditors, and will help make clear a path to address remaining issues for creditors of the estate. A protocol has been agreed to by all parties for the settlement of claims remaining against the LBI estate as the Trustee focuses on liquidating remaining assets.

SIPC President Stephen Harbeck said: "Trustee Giddens and his team have reviewed hundreds of thousands of transactions and dealt with unprecedented legal complexity to achieve these resolutions without the need for protracted litigation.  SIPC always looks to maximize the return of property to customers, and through the Trustee's efforts will now be able to see a full satisfaction of claims to LBI securities customers without further delay. SIPC looks forward to the approval of these agreements by the U.S. Bankruptcy Court and English High Court."

Full details on the agreements can be found at


The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event of the failure of a brokerage firm owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2011, SIPC has advanced $ 1.8 billion in order to make possible the recovery of $ 117.5 billion in assets for an estimated 767,000 investors.

MEDIA CONTACT: Ailis Aaron Wolf, for SIPC, (703) 276-3265 or

All non-media/investor inquiries of SIPC should be directed to or (202) 371-8300.

SOURCE Securities Investor Protection Corporation, Washington, D.C.