A bankruptcy settlement has been reached between JP Morgan Chase & Co. and the trustee of Lehman Brothers. Per the agreement, JP Morgan will pay $106 million in securities and $755 million in cash-that’s $861 million. This will go to the customers of the now defunct Lehman Brothers Holding. The settlement comes after a two-year probe by trustee James Giddens in the Securities Investor Protection Act liquidation proceedings.
Lehman Brothers Holdings Inc., which is Lehman Brothers Inc.’s parent company, filed for bankruptcy in 2008. JP Morgan served as its clearing bank. Some 125,000 customers have filed claims worth about $180 billion total, of which about $130 billion are resolved. The claims that are left include those involving Lehman Brothers Holdings, Lehman Brothers International, and a number of hedge funds. JP Morgan and Lehman Brothers Holdings are still involved in two multibillion-dollar lawsuits.
Per court papers, the majority of the trustee’s claims against JP Morgan come from securities that the bank held but failed to liquidate following the collapse of Lehman brothers. While JP Morgan did not agree with all of the trustee’s findings, they consented to turning over the majority of the funds to resolve the dispute.
Lehman Brothers Holdings claims that JP Morgan Chase abused its role as a clearing house firm when it forced the former to surrender $8.6 billion in cash collateral. Lehman believes that if it could have held on to the funds, it wouldn’t have needed to file for bankruptcy and that even if it still had to shut down, it could have done so in a more orderly fashion.
Judge Clears $861 Million J.P. Morgan-Lehman Settlement, Wall Street Journal, June 23, 2011
JP Morgan to Pay Lehman Brokerage $861 Million in Bankruptcy Court Settlement, FNN, June 23, 2011
Securities Investor Protection Act , US Courts
More Blog Posts:
UBS Financial Services Fined $2.5M and Ordered to Pay $8.25M Over Lehman Brothers-Issued 100% Principal-Protection Notes, Institutional Investors Securities Blog, April 12, 2011
UBS to Pay $2.2M to CNA Financial Head for Lehman Brothers Structured Product Losses, Stockbroker Fraud Blog, January 4, 2011
Lehman Brothers Lawsuit Claims Its Bankruptcy Was In Part Due to JP Morgan Chase’s Seizure of $8.6 Billion in Cash Reserves, Stockbroker Fraud Blog, June 14, 2011
Our securities fraud lawyers represent clients who lost money because they invested in Lehman structured products.