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Lehman Brothers to be placed in liquidation Friday to protect customers and accounts
By Caroline Salls
Pittsburgh, Sept. 18 - Lehman Brothers Inc. will be placed in liquidation on Friday by The Securities Investor Protection Corp. in order to protect Lehman's customers, allow the transfer of customer accounts and unwind the brokerage firm's business, according to an SIPC news release.
According to the release, the SIPC maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms.
SIPC president Stephen Harbeck said in the release that the decision to place Lehman Brothers in liquidation came after extensive talks with representatives of the firm, its parent company, the Securities and Exchange Commission, the Federal Reserve, the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority and others.
"This action is being taken in connection with a proposed sale of the business of the broker-dealer to Barclays Capital Inc.," Harbeck said in the release.
As previously reported, the sale hearing will be held Friday under the Chapter 11 bankruptcy case of Lehman Brothers' parent, Lehman Brothers Holdings Inc.
Harbeck said in the release that SIPC is launching the liquidation proceeding "to minimize market disruption and to allow the transfer of assets and customer accounts of LBI to close in a timely manner under the negotiated asset purchase agreement."
"SIPC will ask the court where the SIPA proceeding is filed to allow the trustee to operate the business of the firm for a limited time so that normal operations can continue," Harbeck said in the release.
New York-based Lehman Brothers Holdings is the fourth largest investment bank in the United States. The company filed for bankruptcy on Sept. 15 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 08-13555.
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