Lehman Brothers Inc. (SIPA Proceeding)

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The liquidation of Lehman Brothers Inc. ("LBI") under the Securities Investor Act of 1970 ("SIPA") is the largest and most complex stock broker liquidation ever attempted, and one of the largest and most complex insolvency proceedings of any kind in history.

The Trustee for the liquidation of LBI fulfills a public duty assigned under SIPA. The Trustee's primary duty under the law is the return of customer property to customers of LBI as defined under SIPA, while at the same time maximizing the estate for all creditors.

Since his appointment on September 19, 2008 by the United States District Court for the Southern District of New York, the Trustee has administered more than $110 billion in the SIPA liquidation of LBI.

All of the Trustee's actions are in coordination with the advice of the Securities Investor Protection Corporation ("SIPC"). More information on SIPC is available at www.sipc.org. Please also refer to the SIPC Investor Guide and How SIPC Protects You.

• Primary Duties
• About the Trustee
• Trustee's Activities
• Reform Efforts

Primary Duties

The Trustee for the liquidation of LBI fulfills a public duty assigned to him under SIPA.

• The Trustee's principal duty is to return property to public customers of LBI and maximize assets available for return while being fair to the rights of other parties.
• SIPA lays out a process for returning assets that requires fairness for all claimants. For more information, please refer to the SIPA Claims Process section of the website.


• The Trustee has a duty to marshal assets to maximize the amount available for distribution as customer property and for the benefit of general creditors. The Trustee regularly reports to the U.S. Bankruptcy Court on progress in marshalling assets and resolving claims. Please refer to Public Reports section of the website for more information.
• The Trustee has a duty to conduct an investigation concerning the acts, conduct, property, liabilities and financial condition of LBI, the operation of its business, and any other matter, to the extent relevant to the liquidation proceeding. The Trustee requests voluntary cooperation when possible, but also has subpoena power.
• The Trustee's final report will provide a public and transparent record and lessons learned from the liquidation of LBI.
• All of the Trustee's actions are in coordination with the advice of SIPC. All expenses incurred by the Trustee and counsel are fully reported to and approved by SIPC and the Court.

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About the Trustee

On September 19, 2008, the United States District Court for the Southern District of New York entered an Order Commencing Liquidation granting the application of the Securities Investor Protection Corporation ("SIPC") for issuance of a Protective Decree adjudicating that the customers of Lehman Brothers Inc. ("LBI") are in need of the protection afforded by SIPA. James W. Giddens was appointed trustee for the liquidation, Hughes Hubbard & Reed LLP was appointed as counsel to the Trustee, and the case was removed to the United States Bankruptcy Court for the Southern District of New York.

The Trustee has retained various experts and professionals to perform various functions and otherwise assist the Trustee in the orderly liquidation of the LBI estate and satisfaction of customer claims.

Generally, in a SIPA liquidation a trustee assumes the premises of a broker-dealer. However, due to the acquisition of such premises by Barclays Capital Inc., the Trustee established a fully operational and staffed New York City office to facilitate review of claims and respond to inquiries to customer and creditors.

The Trustee makes every effort to keep customers and other interested parties informed on all ongoing efforts to administer the LBI estate. For contact information please email teamlehman@hugheshubbard.com.

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Trustee's Activities

The activities of the Trustee for the SIPA liquidation of LBI are summarized in periodic Interim Reports to the Bankruptcy Court. Please refer to the Public Reports section of the website for more information.

Included among the Trustee's activities are the following matters:

SIPA Claims Process

Customer Claims Litigation

LBHI Matters

LBIE Matters

Barclays Matters (including the Account Transfers process)

Please click on any of the above to be directed to more information on those topics.

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Reform Efforts

A SIPA trustee has a duty under the law to investigate the reasons of the broker's failure and, as is traditional, to identify problems that could be remedied in future liquidations. In the case of LBI, these efforts include lessons learned, considerations, and recommendations for the Court, legislators, and regulators.

In that connection, the Trustee made several recommendations for future broker-dealer liquidations in its Preliminary Investigation Report. In all phases of their efforts, the Trustee and his professionals work hand in hand with the Securities Investor Protection Corporation, meet regularly with the United States Securities & Exchange Commission, the Financial Industry Regulatory Authority, the Commodities Futures Trading Commission, and liaise with the Federal Reserve Bank of New York and the British Financial Services Authority.

In addition to these ongoing efforts, the Trustee has also provided hundreds of thousands of pages of documents and information to several governmental entities involved in reform efforts, including the General Accounting Office, Financial Crisis Inquiry Commission, and the Congressional Oversight Panel.

Finally, the Trustee is also a member of the SIPC Modernization Task Force, which is tasked with proposing appropriate statutory amendments to SIPA in light of changes in the securities industry and judicial interpretations of SIPA.

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Trustee's Interim Reports to the Court

In accordance with his duties under SIPA, the Trustee submits periodic Interim Reports to the Bankruptcy Court. Please click below to download these reports:

• Trustee’s Ninth Interim Report: June 14, 2013
• Trustee’s Eighth Interim Report: October 24, 2012
• Trustee’s Seventh Interim Report: April 20, 2012
• Trustee’s Sixth Interim Report: October 21, 2011
• Trustee's Fifth Interim Report: April 22, 2011
• Trustee's Fourth Interim Report: October 26 , 2010
• Trustee's Third Interim Report: May 10, 2010
• Trustee's Second Interim Report: November 11, 2009
• Trustee's First Interim Report: May 29, 2009

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Trustee's Investigation Reports

In accordance with his duties under SIPA, the Trustee must investigate the acts, conduct, property, and financial condition of LBI, including the causes of the broker-dealer's demise and lessons that may be learned from a regulatory perspective. Please click below to download the Trustee's Preliminary Investigation Report and Recommendations, which chronicles LBI's demise and includes practical lessons learned in the course of the liquidation and recommendations for the future. A final report, which among other things will comment on certain of the Trustee's litigations, will be issued at the conclusion of the liquidation.

• Trustee's Preliminary Investigation Report: August 25, 2010

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Trustee's Presentations

Presentations to the Bankruptcy Court

• State of the Estate Presentation: October 28, 2010
• State of the Estate Presentation: August 9, 2011

Presentations to the Managed Funds Association

• Trustee's Update Presentation: August 5 and 7, 2009
• Trustee's Update: February 24, 2010
• Trustee's Update: November 16, 2010

Other Presentations

• Trustee's Meeting of Customers and Creditors: December 17, 2008

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Protocol & Notices

Case Management Orders

• Case Management Order: November 7, 2008
• Amended Case Management Order: July 13, 2010

Notices

• Notices re: Commencement of Liquidation Proceeding and Deadlines for Submitting Claims: December 1, 2008

Protocols

• Outstanding Securities and Commodities Transactions Protocol: September 26, 2008
• October Prime Brokerage Protocol: October 14, 2008
• Misdirected Wires Protocol: April 2, 2010

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The goal of the U.S. Securities Investor Protection Act of 1970 ("SIPA") is to transfer or return cash or property as promptly as possible to customers of a failed brokerage firm. SIPA lays out a process for returning assets that requires fairness for all claimants.

The Trustee for the SIPA liquidation of Lehman Brothers Inc. ("LBI") continues to work through an enormous workload to resolve claims in a fair, transparent and orderly process. This involves analyzing claims against the estate, fairly resolving claim issues and vigorously marshalling assets to maximize the amount available for distribution as customer property.

• SIPA Liquidation Claims Process
• LBI Claims Process
• LBI Customer Claims
• General Creditor Claims
• Claims Registers
• Distributions
• Objections
• Claims Trading

SIPA Liquidation Claims Process

The goal of SIPA is to transfer or return cash or property as promptly as possible to customers of a failed brokerage firm. SIPA lays out a process for returning assets that requires fairness for all claimants.

• SIPA provides that customers of a failed brokerage firm with no indebtedness to the broker receive all non-negotiable securities that are already registered in their names or in the process of being registered. All other so-called "street name" securities and customer cash are distributed on a pro rata basis.
• All customer-related assets are put in a co-mingled fund of customer property. Allocation of property to the fund of customer property is based on a proposal by the Trustee subject to approval by the Bankruptcy Court.
• Each verified claimant is entitled to a pro rata share of the fund of customer property based on the customer's respective "net equity" - the filing date value of a customer's non-customer name securities plus any cash balance owed the customer, less any indebtedness by the customer to the broker-dealer.
• The Trustee must first determine the number of valid claimants and the amount and value of property (securities and cash) under the Trustee's control. Distributions to pay allowed customer claims will be made when there is clarity for reasonable estimates of both the amount of customer property available for distribution and the total net equity of all allowed customers claims. Distributions may be in stages.
• Advances from the Securities Investor Protection Corp. (SIPC) reserve fund are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.

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LBI Claims Process

As of the June 1, 2009 bar date, the Trustee had received more than 12,500 asserted customer claims on behalf of more than 86,000 accounts, along with nealy 9,000 general estate claims. The customer claims include those asserted by, among others, Lehman Brothers Holdings Inc. (LBHI), Lehman Brothers International (Europe) (LBIE), and Barclays Capital Inc. (Barclays) that were filed on an omnibus basis on behalf of many thousands of accounts.

On October 5, 2009 the Trustee filed a Motion for Order Approving the Trustee's Allocation of Property of the Estate pursuant to SIPA seeking Bankruptcy Court approval of an allocation of assets available to satisfy claims. On March 2, 2010, the court entered an Order approving the motion.

On December 1, 2011, the Trustee filed a second motion seeking an order approving the Trustee’s Allocation of Property of the Estate pursuant to SIPA. On April 30, 2012, the Trustee filed a Statement in Further Support of the Second Motion for Order Approving the Trustee’s Allocation of Property. The liquidation has reached a stage where the great bulk of the assets that will be available for distribution are under control of the estate. The second proposed allocation order sets forth the principles by which assets will be allocated to the customer and general estates. The Trustee has been working with interested parties to come to agreement on allocation. An order approving the allocation motion is a prerequisite to distributions from the LBI estate.

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LBI Customer Claims

The Trustee provided claimants with the option to file claims manually and electronically, a first in the history of SIPA liquidations. Pursuant to SIPA §78fff-2(a)(3), customer claims must have been received by January 30, 2009 to be eligible for maximum protection afforded under SIPA. No claim of any kind was allowed if not received by the Trustee on or before June 1, 2009.

A claim is determined when a letter of determination has been sent to the claimant. As described in the Trustee's Third Interim Report, the Trustee has now responded to virtually all asserted customer claims and has made substantial progress in reconciling complex and sizeable omnibus claims.

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General Creditor Claims

The Trustee received nearly 9,000 general creditor claims.

Having now reached agreements or agreements in principle with LBIE, LBHI, and consummated a settlement in principle with Lehman Brothers Finance, SA (LBF) to resolve the claims among their respective entities, and having substantially completed the processing of customer claims filed against the LBI estate, the Trustee has good reason to believe there will be a meaningful distribution to LBI general creditors.

Accordingly, in keeping with SIPA and section 704(a)(5) of the Bankruptcy Code, the Trustee has initiated a comprehensive review and reconciliation of all general creditor claims filed in this proceeding to determine the validity and actual allowed amounts of such claims, and has begun the process of objecting to claims by filing omnibus objections to general creditor claims pursuant to section 502(b) of the Bankruptcy Code, as made applicable to this proceeding pursuant to SIPA sections 78fff(b) and 78fff-1(a), and Bankruptcy Rule 3007(d)(1).

In the interest of reducing the administrative and financial burden imposed on the Court and the LBI estate and expediting the process of reconciling the general creditor claims, the Trustee filed on October 22, 2012, a a Motion for approval of general creditor claim objection procedures and settlement procedures. On November 15, 2012, the Bankruptcy Court entered an Order approving the general creditor claim objection procedures. The proposed settlement procedures will be heard by the Bankruptcy Court on February 13, 2013.

The Trustee, by and through his Claims Agent, EPIQ Systems, maintains Customer and General Creditor Claims Registers. Parties-in-interest may obtain online access to review the General Creditor Claims Register and filed-claim forms by clicking here. Please note the claim images have been redacted and supporting documentation removed. To view claim images with supporting documentation consisting of addendums, annexes, supplements, summaries, exhibits please contact Epiq Systems at 646-282-2500 for secure access. Any supporting documents which have been deemed sensitive in nature such as employee letters or account statements have been removed. If you require a complete copy of the claim image you may contact Epiq Systems at 646-282-2500. Parties should take notice of the disclaimer associated with the General Creditor Claims Register.

Parties-in-interest may obtain online access to review the Customer Claims Register and filed-claim forms by contacting EPIQ Systems at (646) 282-2500. Parties should take notice of the disclaimer also accompanying the Customer Claims Register and the notes associated with the Customer Claims Register. In addition, parties should take notice that certain claims on the Customer Claims Register remain on that Register (rather than the General Creditor Claims Register) though the Customer Claims have been reclassified to General Creditor Claim status, subject to further determination by the Trustee in the General Creditor Claims process.

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Claims Registers

The Trustee, by and through his Claims Agent, EPIQ Systems, maintains Customer and General Creditor Claims Registers (the “Registers”). Parties-in-interest may view the General Creditor Claims Register here and may obtain online access to review the Customer Claim Register and filed-claim forms by contacting EPIQ Systems at (646) 282-2500. Parties should take notice of the disclaimers accompanying both Registers and the notes associated with the Customer Claims Register. In addition, parties should take notice that certain claims on the Customer Claims Register remain on that Register (rather than the General Creditor Claims Register) though the Customer Claims have been reclassified to General Creditor Claim status, subject to further determination by the Trustee in the General Creditor Claims process.

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Distributions

The Trustee will proceed with distributions on allowed customer claims after all claims have been determined and there is sufficient clarity on or resolution of major contingencies and other issues. Distributions may occur in stages depending on the extent of allowed claims and available assets.

Pursuant to SIPA §78fff-3(a), the Trustee has and may continue to request form SIPC advances of funds to satisfy claims below SIPA coverage limits ($500,000 with respect to securities and $100,000 with respect to cash, up to an overall total of $500,000). Pursuant to SIPA §78fff(2)(d), the Trustee may use such SIPC advances to purchase missing securities necessary to deliver to customers in satisfaction of their claims.

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Objections

If a claimant disagrees with the Trustee's determination, the claimant may object and request a hearing before the Bankruptcy Court within thirty days of the date of the letter of determination. If a claimant fails to request a hearing within the thirty days, or if the claimant fails to appear at the scheduled hearing, then the Trustee's determination shall be final and the claim is closed.

Any claimant who requests a hearing will have an opportunity to have its dispute adjudicated by the Court.

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Claims Trading

Both customer and creditor claims may be transferred in the LBI SIPA liquidation proceeding. To receive notices and distributions with respect to a transferred claim, notice of a claim transfer (if any is required to be filed with the bankruptcy court) must be provided in accordance with Bankruptcy Rule 3001(e).

The Trustee neither encourages nor discourages claims trading. Potential transferors and transferees of claims should make their own independent evaluation of whether to enter into a claims trade based upon the public record in this case. The Trustee notes that a properly transferred claim merely provides the transferee with the right to pursue distributions on account of such claim. It is not a determination of the validity, amount or priority of such claim, nor of any claim or defense that the Trustee may have with respect to that claim or as against the transferor or transferee of such claim.

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Resolved Customer Claims Matters

TBAs and Other Forward Transactions

• Memorandum Decision Confirming the Trustee’s Determination of Claims Relating to TBA Contracts (12/8/2011)



• Order Confirming the Trustee’s Determinations of Claims Relates to TBA Contracts (12/20/2011)

Soft Dollar Commission Credits

• Memorandum Decision Confirming the Trustee’s Determination of Claims Relating to Soft Dollar Commission Credits (7/10/2012)



• Order Confirming the Trustee’s Determination of Claims Related to Soft Dollar Commission Credits (7/16/2012)

Shorts Valuation Date

• Memorandum Decision Granting Motion to Uphold Determination of Claim by SIPA Trustee regarding the claim of Fifth Third Structured Large Cap Plus Fund (6/1/2010)


• Order Upholding Determinations with Respect to Certain Claims Based on Short Positions Held in Prime Brokerage Accounts at LBI and Expunging Objections Thereto (3/31/2011)

Miscellaneous Objections

• Order Upholding Determinations as to Claims (i) Based on No Relationship with LBI, (ii) For Accounts Empty as of the Filing Date, and (iii) For Accounts Previously Transferred in Accordance with SIPA and the Account Transfer Order and Expunging Related Objections Thereto (8/19/2010)


• Order Upholding Determinations as to Claims (i) Based on Employee Compensation; (ii) Based on Investments in Funds That Are Not Held at LBI; and (iii) Based on Relationships with Entities Other Than LBI and Expunging Related Objections Thereto (12/9/2010)

MainStay Motion

• Stipulation and Order Withdrawing Without Prejudice the Motion of Mainstay High Yield Opportunities Fund for an Order Pursuant to Sections 363, 541, and 105 of the Bankruptcy Code for Relief from the Automatic Stay to Remove Lehman Brothers Inc. as Agent and Granting Related Relief (2/16/2011)

Fraud/Misrepresentation/Market Loss/Hedging

• Order Upholding Determinations Denying Customer Status to Claims Arising from Alleged Fraud, Misrepresentation, Market Loss or Hedging Transactions and Expunging Related Objections Thereto (11/3/2010)

Foreign Currency Transactions (FX)

• Order Upholding the Trustees Determinations as to Certain Claims (I) Arising from Pre-Petition Misdirected Wires; (II) Based Upon Foreign Currency Transactions with LBSF; and (III) Received by the Trustee After the Bar Date and Expunging Objections Thereto (3/28/2012)


• Order Confirming the Trustees Determinations Regarding Skandinaviska Enskilda Banken AB (Publ)s Claim for Cash on Deposit in Connection with Forward Foreign Currency Transactions and Expunging Related Objections Thereto (10/17/2011)


• Order Confirming the Trustees Determinations Regarding Certain Claims for Cash on Deposit in Connection with Forward Foreign Currency Transactions and Expunging Related Objections Thereto (6/30/2011)

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Ongoing Customer Claims Litigation Matters

Repurchase Transactions

• The Trustee has denied customer treatment to claims arising out of repurchase (“repo”) agreements entered into with LBI, which represent financing arrangements rather than customer securities transactions. These claims have been reclassified as claims against the general estate. The Trustee is continuing to analyze these claims and prepare for potential litigation.


• The Trustee and certain repo claimants with the largest claims by dollar amount have agreed on a schedule for presenting to the Court the question of whether repo claims are entitled to customer status, as approved by the Court.


• Trustee’s Motion For An Order Confirming The Trustee’s Determination Of Claims Relating To Repurchase Agreements (4/6/2012)


• Memorandum of Law of the Securities Investor Protection Corporation in Support of Trustee’s Motion for Order Confirming the Trustee’s Determination of Claims Related to Repurchase Agreements (4/6/2012)


• Reply Memorandum of Law of the Securities Investor Protection Corporation in Support of Trustee’s Motion for Order Confirming the Trustee’s Determination of Claims Related to Repurchase Agreements (9/28/2012)


• Stipulation and Order Signed on 7/13/2011 Regarding Discovery in Connection with Objections to the Trustee's Determinations of Claims Arising Out of Repurchase and Reverse Repurchase Transactions

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LBI/LBHI Agreement in Principle

On February 28, 2012, the Trustee and Lehman Brothers Holdings Inc. and certain of its affiliates announced that an agreement in principle had been reached to resolve all claims among their respective entities.

The complex agreement in principle is subject to documentation and various approvals, including by the Bankruptcy Court. There is no assurance that an agreement among the parties will be consummated.

LBIE, based in London, was the principal European broker-dealer within Lehman. Prior to the commencement of the liquidation, LBI dealt extensively with LBIE. As a result of the insolvency of LBIE, in September 2008, certain partners of PricewaterhouseCoopers ("PWC") were appointed as the LBIE Administrators.

On October 5, 2012, the Trustee and the LBIE Joint Administrators announced that an agreement in principle had been reached to resolve all claims among their respective entities totaling $38 billion.

The agreement is subject to documentation, approval by the U.S. Bankruptcy Judge, the Honorable James M. Peck, and an order of the English High Court. If approved, the agreement will allow the Trustee and the Joint Administrators to proceed with plans to allocate and distribute assets to customers and creditors.

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 percent recovery of customer property. 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. The Trustee will now work toward the Court approvals necessary for distributions on top of the more than $90 billion already made to customers.

Terms of Agreement in Principle

• LBIE’s Omnibus customer claim against LBI of $15.1 billion will be allowed in an amount of approximately $7.5 billion (valued as of 19 September 2008) in securities and cash. This claim will be augmented by post-filing income estimated to be approximately $600 million.



• LBIE’s House customer claim against LBI of $8.9 billion will be replaced by an allowed cash net equity customer claim of $500 million.



• LBI will stipulate to an LBIE general property claim in the amount of $4.0 billion, and LBI’s unsecured claim against LBIE of $13.8 billion will be eliminated.



• LBI’s Client Money claim against LBIE will be assigned to LBIE’s nominee.



• The parties have agreed to suspend scheduled litigation activity until mid-December 2012 to allow work to proceed in finalizing of this agreement.



• The agreement limits the amount of the maximum recoveries that each would make into the other's estate from the claims asserted so that planning for distributions in their respective estates can continue.

If a final agreement between the parties can be reached before December 15, 2012, a U.S. Bankruptcy Court hearing seeking approval of the agreement can be anticipated in the first quarter of 2013.

NOTE: THE SALE TO BARCLAYS CLOSED ON SEPTEMBER 22, 2008

Update on Barclays Matters

On June 7, 2012, the Trustee filed a notice of appeal to the United States Court of Appeals for the Second Circuit regarding a ruling handed down by Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York. Judge Forrest’s ruling was on appeals from the Trustee and Barclays Capital Inc. stemming from the Bankruptcy Court’s opinion on assets disputed by the parties related to the September 2008 sale of LBI to Barclays.

The Trustee is appealing the District Court’s decision on the margin and clearance box assets. The Trustee believes he has strong grounds for recovering these assets for the ultimate benefit of LBI customers and other creditors.

On September 20, 2012, the Trustee filed his brief to the Second Circuit, and the Securities Investor Protection Corporation filed a brief of intervenor to the Second Circuit.

Judge Forrest, in a June 5, 2012 ruling, rejected Barclays’ claim to $769 million in LBI’s Rule 15c3-3 customer reserve accounts and $507 million that is considered part of LBI’s required Reserve Bank Account. Judge Forrest also ruled that the LBI estate is not entitled to approximately $3.5 billion in margin and other assets used to support LBI’s derivatives trading and roughly $2 billion in certain assets in LBI’s clearance boxes at Depository Trust & Clearing Corporation.

The Trustee strongly believes that the former customers of Lehman Brothers Inc. are entitled to the margin and clearing box assets and that the law and facts support his claims to these assets, and his duty to customers mandates that he continue to pursue all legal avenues to recover the assets for the LBI estate.

The District Court’s ruling overturned a previous ruling by U.S. Bankruptcy Judge James M. Peck awarding margin and other assets to the LBI estate. In the earlier decision, made after 34 days of trial, Judge Peck rejected Barclays’ claims to the margin assets. Judge Peck found that the assets remained with the LBI estate and did not transfer to Barclays with the sale in 2008. The Trustee believes the Bankruptcy Court’s carefully considered factual findings and rulings were correct and that these assets should be available to repay LBI’s public customers and others.

Due to the expected extended legal process on these issues, the Trustee has appropriately reserved for the Barclays litigation.

Sale To Barclays

On September 20, 2008, the Court entered an Order Under 11 U.S.C. §§ 105(a), 363, and 365 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 6006 Authorizing and Approving (A) The Sale of Purchased Assets Free and Clear of Liens and Other Interests and (B) Assumption and Assignment of Executory Contracts and Unexpired Leases (the "Sale Order"). Click on the links below to see the various documents associated with the sale.

Executed Sale Documents

• Asset Purchase Agreement
• First Amendment to Asset Purchase Agreement
• Clarification Letter
• DTCC Letter

Sale Motion/Order Documents

• To see a complete copy of the Sale Motion, dated September 17, 2008, please click here.
• To see a complete copy of the Sale Order, dated September 19, 2008, entered in the SIPA proceeding, please click here.
• To see a complete copy of the Sale Order, dated September 20, 2008, please click here.

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Customer Account Transfer Process

• Pursuant to SIPA and the Court order commencing the liquidation of LBI, the Trustee effectuated transfers of three sets of customer accounts: (i) Private Asset Management ("PAM") accounts; (ii) Private Investment Management ("PIM") accounts; and prime brokerage ("PB") accounts (together, the "Account Transfers").


• The Account Transfers involved transferring over 110,000 customer accounts representing over $92 billion in account value so that customers could access their property and continue trading through Neuberger Berman, Barclays Capital Inc. and other Securities Investor Protection Corporation ("SIPC") member broker-dealers. These transfers protected thousands of customers from disruption and delay, preserved billions of dollars in value and eased market tensions in exceptionally uncertain times.


• On December 10, 2009, the U.S. Bankruptcy Court approved the final remaining transfer of PIM assets to former LBI customers. This milestone brought to a successful conclusion the Account Transfer phase of the SIPA liquidation of LBI. The U.S. Securities and Exchange Commission ("SEC") and the Federal Reserve Bank of New York all supported the Trustee's motion and the account transfer process, and with this ruling their and the Trustee's goal of customer protection has in fact been achieved. The Trustee obtained permission of the Court to implement the Account Transfers for the benefit of customers by order dated December 14, 2009.

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Trustee's Statements and News Releases

• Statement Regarding 100 Percent Distribution to Customers: June 7, 2013


• Statement Regarding Approval of LBI Agreements With LBIE and LBHI: April 16, 2013


• Joint Announcement on LBI, LBIE and LBHI Final Agreements (February 26, 2013)


• Statement Regarding Lehman Brothers Inc. and Citibank, N.A. Agreement: November 16, 2012


• Joint Announcement from LBI and LBIE Regarding an Agreement in Principle: October 5, 2012


• Statement Regarding Appeal of the Federal Court Ruling on Barclays Litigation: June 7, 2012


• Statement Regarding the Federal Court Ruling on Barclays Litigation: June 5, 2012


• Statement Regarding UK Supreme Court Client Money Decision: February 29, 2012
• Joint Announcement from LBI and LBHI Regarding an Agreement in Principle: February 28, 2012
• FAQ on the State of the Estate: September 8, 2011
• News Release Lehman Brothers Trustee and JPMorgan Reach Agreement on Return of More than $800 Million in Customer Assets for Distribution to Customer Claimants: April 21, 2011
• News Release Preliminary Investigation Report: August 25, 2010
• Statement on Lehman Brothers Holding Inc. Decision on Retiree Health and Medical Benefits: October 19, 2009
• Statement Regarding Trustee's Complaint against Barclays and Barclays' Opposition Memorandum: January 29, 2010
• Statement Regarding Trustee's Complaint against Barclays and Barclays Opposition Memorandum: March 18, 2010
• Statement Regarding Testimony Supporting Trustee's Position and Demonstrating Weakness of Barclays' Claims: May 7, 2010
• Statement Regarding Determination of Customer Claims and Distributions: July 1, 2009
• Statement Regarding the October 14, 2008 Prime Brokerage Protocol: January 23, 2009
• Open Letter To Prime Brokerage Customers and Other Interested Parties: December 1, 2008


• News Release: James W. Giddens, Lehman Brothers Inc. SIPC Trustee, Reports on Progress of U.S. Liquidation: September 26, 2008

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SIPC Releases

• SIPC Press Release Lehman Agreement Paves Way for 100 Percent Return of Customer Property: October 5, 2012


• SIPC Press Release James W. Giddens, Lehman Brothers Inc. SIPC Trustee, Reports on Progress of Customer Claim Processing: February 25, 2009


• SIPC Press Release SIPC: Claims Forms Mailed to Lehman Brothers Inc. Customers and Creditors: December 2, 2008


• SIPC Press Release SIPC: James W. Giddens, Lehman Brothers Inc. SIPC Trustee, Announces Protocols Regarding Prime Brokerage Arrangements & Other Broker-Dealer Transactions: October 7, 2008


• SIPC Press Release SIPC: James W. Giddens, Lehman Brothers Inc. SIPA Trustee, Reports on Progress of U.S. Liquidation: September 26, 2008


• SIPC Press Release Lehman Brothers Inc. Liquidation Proceedings Paves Way for Asset Purchase Agreement by Barclays: September 20, 2008

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Court Opinions and Trustee's Filings

• Trustee’s Motion for an Order Approving Allocation of Property (January 31, 2013)


• Trustee’s Motion for an Order Approving Settlement Agreement with Lehman Brothers Bankhaus AG (In Insolvenz) (November 29, 2012)


• Trustee’s Motion Pursuant To Section 105(A) Of The Bankruptcy Code And Federal Rule Of Bankruptcy Procedure 9019 For Entry Of An Order Approving Settlement Agreement With The Citi Parties (November 16, 2012)


• Order Approving Settlement Agreement Between The Trustee And Lehman Brothers Finance Ag, In Liquidation (November 15, 2012)


• Trustee’s Motion for Approval of General Creditor Claim Objection and Settlement Procedures (October 22, 2012)


• Trustee’s Motion for an Order Approving Settlement Agreement with Lehman Brothers Finance AG (October 3, 2012)


• Order Approving Sale of Navigator Shares (September 24, 2012)


• Proof Brief Of Appellant/Cross-Appellee James W. Giddens, As Trustee For The Sipa Liquidation Of Lehman Brothers Inc. (September 20, 2012)


• Brief Of Intervenor Securities Investor Protection Corporation (September 20, 2012)


• Order Confirming The Trustee’s Determination Of Claims Related To Soft Dollar Commission Credits (July 16, 2012)


• Memorandum Decision Confirming the Trustee’s Determination of Claims Relating to Soft Dollar Commission Credits (July 10, 2012)


• Notice of Appeal to the United States Court of Appeals for the Second Circuit (June 7, 2012)


• Order Upholding the Trustees Determinations as to Certain Claims (I) Arising from Pre-Petition Misdirected Wires; (II) Based Upon Foreign Currency Transactions with LBSF; and (III) Received by the Trustee After the Bar Date and Expunging Objections Thereto (March 28, 2012)


• Order Confirming The Trustee’s Determination Of Claims Related To TBA Contracts (December 20, 2011)


• Memorandum Decision Confirming the Trustee’s Determination of Claims Relating to TBA Contracts (December 8, 2011)


• Second Motion for Order Approving the Trustee’s Allocation of Property (December 1, 2011)


• Order Confirming the Trustees Determinations Regarding Skandinaviska Enskilda Banken AB (Publ)s Claim for Cash on Deposit in Connection with Forward Foreign Currency Transactions and Expunging Related Objections Thereto (October 17, 2011)


• Memorandum Decision Enforcing the Automatic Stay and Compelling Payment by UBS AG, Case No. 08-1420 (Bankr. S.D.N.Y. October 4, 2011)


• Stipulation and Order Regarding Discovery in Connection with Objections to the Trustee's Determinations of Claims Arising Out of Repurchase and Reverse Repurchase Transactions (July 13, 2011)


• Order Confirming the Trustees Determinations Regarding Certain Claims for Cash on Deposit in Connection with Forward Foreign Currency Transactions and Expunging Related Objections Thereto (June 30,2011)


• Order Upholding Determinations with Respect to Certain Claims Based on Short Positions Held in Prime Brokerage Accounts at LBI and Expunging Objections Thereto (March 31, 2011)


• Memorandum Decision granting motions to dismiss issued in Evergreen Solar Inc. v . Barclays PLC Case No. 08-1633 (Bankr. S.D.N.Y. February 22, 2011)


• Opinion On Rule 60(b) Motions Issued, Case No. 08-1420 (Bankr. S.D.N.Y. February 22, 2011)


• Stipulation and Order Withdrawing Without Prejudice the Motion of Mainstay High Yield Opportunities Fund for an Order Pursuant to Sections 363, 541, and 105 of the Bankruptcy Code for Relief from the Automatic Stay to Remove Lehman Brothers Inc. as Agent and Granting Related Relief (February 16, 2011)


• Order Upholding Determinations as to Claims (i) Based on Employee Compensation; (ii) Based on Investments in Funds That Are Not Held at LBI; and (iii) Based on Relationships with Entities Other Than LBI and Expunging Related Objections Thereto (December 9, 2010)


• Order Upholding Determinations Denying Customer Status to Claims Arising from Alleged Fraud, Misrepresentation, Market Loss or Hedging Transactions and Expunging Related Objections Thereto (November 3, 2010)


• Order Upholding Determinations as to Claims (i) Based on No Relationship with LBI, (ii) For Accounts Empty as of the Filing Date, and (iii) For Accounts Previously Transferred in Accordance with SIPA and the Account Transfer Order and Expunging Related Objections Thereto (August 19, 2010)


• Memorandum Decision Granting Motion to Uphold Determination Of Claim By SIPA Trustee, Case No. 08-1420 (Bankr. S.D.N.Y. June 1, 2010) (Fifth Third Decision)


• Order Denying Motion Of DCI Umbrella Fund PLC, Case No. 08-CV-8119 (S.D.N.Y. April 26, 2010)

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Forms

*** Note: The time to file a claim in LBI's SIPA Proceeding has passed. The below forms are for informational purposes only ***

• SIPC Forms 300 A, B and C

  SIPC Form 300-A
  SIPC Form 300-B
  SIPC Form 300-C
  

• Claim Forms and Instructions Packet: December 1, 2008

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On August 9, 2011, the Trustee for Lehman Brothers Inc. (“LBI”) and his representatives presented a State of the Estate update before Judge James M. Peck of the United States Bankruptcy Court for the Southern District of New York.

On August 10, 2011, in New York City, and on August 12, 2011, in London, the Trustee and/or his representatives presented the State of the Estate to creditors and other interested parties. The New York presentation was sponsored by the Managed Funds Association, and the London presentation was sponsored by the Alternative Investment Management Association.

The State of the Estate summarizes the efforts of the Trustee to resolve claims in a fair, transparent and orderly process and vigorously marshal assets to maximize the amount available for distribution as customer property. Below are answers to some representative questions asked by attendees of the presentations.

How Much Property Is In The LBI Estate?

There is approximately $25 billion in cash and securities presently under the Trustee’s control, which is reduced to $20.6 billion when factoring in certain reserves ($3 billion related to Barclays litigation and $1.3 related to post-petition dividends and interest).

This is the total amount of property in the LBI estate. This amount will be allocated between the fund of customer property and the general estate. Claims against the LBI estate exceed the current total value of the estate: $12.2 billion in allowed customer claims, and approximately $100 billion of unresolved customer claims and asserted general creditor claims. The estate may be augmented by further recoveries and settlements by at best a few billion dollars.

What Is Allocation And Why Does The Trustee Need To Do It?

In a liquidation under the Securities Investor Protection Act (“SIPA”), the Trustee allocates estate property between a fund of customer property and a general estate. The fund of customer property is used to satisfy customer claims. A separate general estate is used to satisfy general creditor claims and other expenses in accordance with the priorities of the Bankruptcy Code. If there is any shortfall in the satisfaction of customer claims (i.e. if customers receive less than 100 cents on the dollar), then that shortfall becomes a general unsecured claim against the general estate as well.

U.S. customer protection rules require a broker-dealer to segregate, or set aside, customer property from other property and maintain reserves for the exclusive benefit of customers. The SIPA liquidation process mirrors the customer protection intent of these rules: where a broker-dealer has failed to set aside customer property, property may be transferred from other sources to the fund of customer property to compensate for such compliance shortfalls. In 2010, the Court sustained the Trustee’s authority to compensate customers for compliance shortfalls in this case. See Order.

The Trustee intends to file a proposed allocation to the Court on motion with notice to and the opportunity to be heard by all interested parties in the next few months. The allocation, relying on the principles set forth in the Court’s 2010 Order, will specify the property the Trustee proposes to allocate to the fund of customer property and the general estate. The Court will determine the appropriate allocation based on the Trustee’s motion and responsive submissions.

When Will Distributions Begin On Allowed Customer Claims?

The Trustee will make distributions on allowed customer claims when major claims determination issues are resolved, the fund of customer property is established, and there is sufficient clarity on, or resolution of, at least several of the major contingencies. Distributions may occur in stages depending on the value of all allowed claims, available assets, and resolution of contingencies. The Trustee continues to study the feasibility of an interim distribution, which is complicated by the significant cost and complexity of implementing a distribution.

What Assets Are Expected To Be In The General Estate?

The size of the general estate will be determined by an allocation proposal that must be presented to and approved by the Court. While the precise size of the general estate has not yet been established, it is clear that LBI’s apparent capital base had disappeared by September 19, 2008, that significant property was held in segregation for customers, and that total claims to the general estate exceed all amounts under the Trustee’s control, let alone those that will be available for general creditors. As a result, even assuming some additional recoveries and significant reductions in allowable claim amounts, a major shortfall in the general estate is inevitable.

When Will Post-Petition Dividends And Interest Be Distributed And In What Form Will The Distributions Be In?

As of June 30, 2011, the Trustee has received approximately $1.3 billion of dividends and interest received after September 19, 2008 on both customer and proprietary assets. These post-petition amounts are accounted for separately from other estate property. SIPA does not specify how a trustee is to treat post-petition interest and dividends attributable to customer property. The Trustee believes that these amounts should be returned to customers, and intends to present a motion requesting that the Court approve a method of determining and distributing dividends and interest once the universe of allowed claims is known and the fund of customer property has been established. The motion will be on notice to all parties in the case.

The distribution of post-petition dividends and interest will most likely occur after or in conjunction with distributions from the fund of customer property, but prior to distributions to general unsecured creditors.

How Does The Trustee Treat Corporate Actions?

The Trustee’s professionals monitor redemptions, tender offers, and other corporate events affecting securities under the Trustee’s control as part of the ongoing administration of the LBI estate. All decisions with regard to participation in corporate actions are determined pursuant to the Trustee’s business judgment regarding the interests of the LBI estate.

What Is The Process For Resolving Duplicate LBIE/LBI Claims?

The Trustee is presently working with Lehman Brothers International (Europe) (“LBIE”) Administrators to identify and reconcile duplicate claims submitted by LBIE customers in the LBIE and LBI proceedings. In addition, the Trustee has begun the process of comparing the allowed LBIE omnibus claim to the SIPA claims of LBIE customers. This is a time consuming and exhaustive process that involves a cusip-by-cusip comparison per customer. In some cases, LBIE customers held non-U.S. securities, which were not held in the omnibus account at LBI. Securities that LBIE rehypothecated would similarly not be held in the omnibus account at LBI. Nevertheless, the Trustee expects to resolve many LBIE customers’ objections through the allowed LBIE omnibus customer claim. Some objections, however, may have to be litigated.

What Are The Major Remaining Contingencies?

LBIE submitted a $13.9 billion proprietary (“house”) claim. In September 2010, the Trustee determined that this was not a customer claim. LBIE objected to the Trustee’s determination as it relates to approximately $8.9 billion of its house claim. The parties have entered a Joint Scheduling Order for judicial determination of the dispute.

LBIE also filed a $16.4 billion omnibus customer claim on behalf of its underlying customers. The Trustee allowed this claim in the amount of approximately $8.3 billion. LBIE’s deadline to object to the portions that were denied or reclassified is October 31, 2011. Almost three hundred of LBIE’s underlying customers filed customer claims to the same property, which the Trustee denied as improper claims against LBI since the property was not held in LBI accounts but in LBIE accounts. The claims of LBIE customers that are duplicative in part of LBIE’s omnibus customer claim total approximately $13 billion. While the Trustee expects the amounts that are unresolved with respect to these customers to be reduced significantly as duplicative claims are resolved, he recognizes that there are likely to be some significant disputed amounts with respect to some claims that will likely have to be resolved through further discussions and litigation.

Lehman Brothers Holdings Inc. (“LBHI”) and the other Chapter 11 Debtors asserted claims totaling $19.9 billion. The Trustee has allowed over $523 million and the Chapter 11 Debtors agree that $11.4 billion is subject to subordination. The remaining $8 billion potentially in dispute has been denied or reclassified by the Trustee. The Chapter 11 Debtors’ deadline to object is September 30, 2011.

Other major contingencies include resolution of the Barclays appeal and the allocation motion described in the above.

Does The Trustee Intend To Make Distributions On The LBIE Omnibus Claim To LBIE Or To The Underlying LBIE Customers?

The Trustee prefers a cross-border approach that resolves the LBIE omnibus customer claim and also provides for distributions to underlying LBIE customers. The Trustee will require appropriate releases from customers and LBIE before property is released.

• Trustee's Interim Reports to the Court
• Opinions
• News
• Presentations
• Protocols & Notices
• Misdirected Funds
• Claims Trading - Important Information   New update!
• Tax Update
• Forms and Letters

Trustee's Interim Reports to the Court

• Fourth Interim Report, dated 10/26/10   New update!
• Third Interim Report, dated 5/10/10
• First Interim Report, dated 5/29/09

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Opinions

• Memorandum Decision Granting Motion to Uphold Determination Of Claim By SIPA Trustee, Case No. 08-1420 (Bankr. S.D.N.Y. June 1, 2010)
• Order Denying Motion Of DCI Umbrella Fund PLC, Case No. 08-CV-8119 (S.D.N.Y. Apr. 26, 2010)
• Client Money Judgment   New update!
  • On August 2, 2010, the Court of Appeal in London issued a unanimous ruling that clients for which LBIE held client money are entitled to share in a client money pool even if LBIE did not segregate such client money for them. The court's decision, available here, overturns in part a December 2009 ruling by the High Court as well as a supplementary ruling issued in January 2010. The lower court had ruled that the pool of pre-administration segregated client money was to be distributed to only those clients for which LBIE had segregated client money prior to its administration in proportion to the amount segregated for them, and that LBIE had no obligation to correct the shortfall in the amount of client money held on a segregated basis. The Trustee, together with three other respondents, appealed the first instance client money judgment. The Court of Appeal (reversing the High Court decision), held that the Financial Services Authority's Client Assets Rules require that identifiable client money held by LBIE outside its segregated accounts must be pooled with client money held in its segregated accounts and distributed to all clients entitled to a claim against the pool.
  • The LBI Trustee has a claim against LBIE for a substantial amount of money that should have been segregated but was not. The Court of Appeal's judgment increases the protection of customers and customer property, and should lead to greater recovery for customers and others in the SIPA liquidation of LBI. It is not known yet whether the decision will be appealed to the U.K. Supreme Court.

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News

• SIPC Press Release Regarding Trustee's Preliminary Investigation Report dated August 25, 2010   New update!
• Trustee's Statement Regarding Testimony Supporting Trustee's Position and Demonstrating Weakness of Barclays' Claims, dated 5/7/10   New update!
• Trustee's Statement Regarding Trustee's Complaint against Barclays and Barclays Opposition Memorandum, dated 3/18/10
• SIPC Press Release Regarding Phony “Look-Alike” Web Site Targeting Madoff Victims, dated 3/9/10
• Trustee's Statement Regarding Trustee's Complaint against Barclays and Barclays' Opposition Memorandum, dated 1/29/10
• Statement on Lehman Brothers Holding Inc. Decision on Retiree Health and Medical Benefits , dated 10/19/09
• Statement Regarding Determination of Customer Claims and Distributions, dated 7/1/09
• News Release: James W. Giddens, Lehman Brothers Inc, SIPC Trustee, Reports on Progress of Customer Claim Processing, dated 2/25/09
• Statement Regarding the October 14, 2008 Prime Brokerage Protocol, dated 1/23/09
• Open Letter To Prime Brokerage Customers and Other Interested Parties, dated 12/1/09
• News Release: James W. Giddens, Lehman Brothers Inc. SIPC Trustee, Reports on Progress of U.S. Liquidation, dated 9/26/08

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Presentations

• Trustee's Update to Managed Funds Association, dated 11/16/10    New update!
• Trustee's Update to Managed Funds Association, dated 2/24/10
• Trustee's Update Presentation, dated 8/5/09 and 8/7/09
• Trustee's Meeting of Customers and Creditors, dated 12/17/08

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Protocols & Notices

• Amended Order Pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy Rule 1015(c) and 9007 Implementing Certain Notice and Case Management Procedures and Related Relief, dated 07/13/10    New update!
• Protocol for Returns of Misdirected Wires, dated 4/2/10
• Notice re: Commencement of Liquidation Proceeding and Deadlines for Submitting Claims, dated 11/26/08
• Order Pursuant To Section 105(A) Of The Bankruptcy Code And Bankruptcy Rules 1015(C) And 9007 Implementing Certain Notice And Case Management Procedures And Related Relief, dated 11/7/08
• Protocol of the Lehman Brothers Inc. Trustee Regarding Prime Brokerage Arrangements, dated 10/14/08
• Protocol Regarding Lehman Brothers Inc. Outstanding Securities and Commodities Transactions, dated 9/26/08
• Protocol Regarding Lehman Brothers Inc. Prime Brokerage Arrangements, dated 9/26/08

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Misdirected Funds

• Protocol for Returns of Misdirected Funds, dated 4/2/10    New update!
• Request Form for the Return of Misdirected Funds, dated 4/2/10    New update!

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Claims Trading - Important Information   New update!

Both customer and creditor claims may be transferred in the LBI SIPA liquidation proceeding. To receive notices and distributions with respect to a transferred claim, notice of a claim transfer (if any is required to be filed with the bankruptcy court) must be provided in accordance with Bankruptcy Rule 3001(e).

The Trustee neither encourages nor discourages claims trading. Potential transferors and transferees of claims should make their own independent evaluation of whether to enter into a claims trade based upon the public record in this case. The Trustee notes that a properly transferred claim merely provides the transferee with the right to pursue distributions on account of such claim. It is not a determination of the validity, amount or priority of such claim, nor of any claim or defense that the Trustee may have with respect to that claim or as against the transferor or transferee of such claim.

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Tax Update

Form 1099 Information

If you previously received Forms 1099 as a Lehman account holder to report items such as interest and dividends, please note that no reportable activity occurred during the 2009 calendar year. Therefore, 2009 Forms 1099 were not required to be issued. 2008 is the last year for which such Forms will be issued by Lehman to account holders. If for any reason you feel the information on your 2008 Form 1099 was incorrect, please contact your tax advisor. The 2008 Forms 1099 were prepared with information contained in Lehman's systems; therefore, revised forms will not be issued.

Cost Basis Information

We are unable to provide you with cost basis information relating to sales of securities that took place during the time you were a Lehman account holder. Please contact your investment advisor or refer to the monthly statements that were provided to you throughout the years to calculate the appropriate cost basis. We are unable to provide you with additional copies of monthly statements.

Tax Advice

We are unable to provide you with tax advice. Please contact your tax advisor.

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Forms and Letters

• SIPC Forms 300 A, B and C

  SIPC Form 300-A
  SIPC Form 300-B
  SIPC Form 300-C
  
• Claim Forms and Instructions Packet, dated 12/01/08
• Japanese translations of Claim Packet
  • Customer claim form
  • General creditor claim form
  • Notice of commencement
  • Letter to customers
  • Letter to brokers
  • Letter to creditors
  • Instructions for completing customer claim form

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