Tag Archives: Lehman Brothers

U.S. judge rejects Lehman workers’ claims on stock awards

Former senior employees of Lehman Brothers Holdings Inc [LEHLO.UL] who once commanded seven-figure pay packages failed to persuade a federal judge to restore hundreds of millions of dollars of stock awards that become worthless after the Wall Street bank’s collapse.

In a decision made public on Thursday, U.S. District Judge Richard Sullivan said the awards should be classified as equity, subject to being wiped out, rather than as contract claims entitling the workers to cash payouts from Lehman’s estate.

The decision covers an estimated $200 million or more of restricted stock units (RSUs) that Lehman awarded as an incentive to perform well over the long-term, before its Sept. 15, 2008 bankruptcy helped trigger that year’s global financial crisis.

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Lehman to Pay Out Additional $1.6 Billion to Creditors

The team winding down Lehman Brothers Holdings Inc. said Thursday it would be paying $1.6 billion to creditors next week, more than seven-and-a-half years after the investment bank’s collapse triggered the financial crisis.

The payout, the ninth since the investment failed, will bring the total payout in the firm’s bankruptcy to approximately $106.9 billion. The bulk of the cash?$78.5 billion?has gone to pay so-called third-party, or non-Lehman claims.

Most the latest payout, some $1.3 billion, is also earmarked for non-Lehman creditors and is slated to be made March 31.

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Looking Back at Lehman’s Collapse With the Woman Who Fell Farthest

Erin Callan’s new memoir recalls the steep price she paid to become Lehman’s CFO just in time for the financial crisis.

As the financial system was teetering and about to collapse, Erin Callan had a prescient exchange with one of her colleagues at Lehman Brothers. It was Nov. 29, 2007, and news that the co-president of Morgan Stanley, Zoe Cruz, had just been fired after her firm took a $3.7 billion loss on subprime mortgage securities was flashing across TV screens all over Lehman’s trading floor. Joe Gregory, the chief operating officer of Lehman, popped into Callan’s office. “Did you see the Morgan Stanley news?” Gregory asked. “The news about Zoe?” Callan, who was about to take over as Lehman’s chief financial officer, was distressed. Cruz was one of the highest-ranking women on Wall Street. Without her, Callan would be left standing nearly alone as a female atop a male-dominated industry, like a weather vane attached to a roof that may or may not have been sound. The parallels with Cruz’s situation were obvious.

“Zoe’s destiny was my possible destiny,” Callan writes in a new memoir published Monday. “Her story was similar to my story in a big picture way.”

Callan wrote her book, Full Circle: A Memoir of Leaning In Too Far and the Journey Back, to try to share the lessons she learned—painfully and publicly—about the dangers of prioritizing one’s career ahead of everything else. She now sees that her total obsession with work and achievement came at the expense of everything else in her life, including meaningful personal relationships. Lehman turned out to be at the center of the financial crisis and ultimately filed for bankruptcy in September 2008. Callan had left the company months before, but she was still shamed and humiliated, her face appearing like a mug shot on newspapers across the country.

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Court Rejects Lehman Employees’ Appeal Against Ex-CEO

A U.S. appellate court on Friday ruled Lehman Brothers Holdings Inc.’s former chief executive isn’t accountable for squandering employees’ retirement savings on stock that was rendered worthless when the investment bank collapsed into bankruptcy.

A three-judge panel of the Second U.S. Circuit Court of Appeals in New York affirmed the decision by U.S. District Judge Lewis A. Kaplan to dismiss a class-action lawsuit against former CEO Richard Fuld and other retirement plan directors filed by former Lehman employees, who saw hundreds of millions of dollars in retirement savings disappear when the bank filed for bankruptcy.

The former employees, who sued Mr. Fuld and the other directors under the federal Employee Retirement Income Security Act, failed to convince the appellate panel despite a 2014 U.S. Supreme Court decision involving Fifth Third Bancorp that made it easier for employees to pursue lawsuits against directors over losses to retirement plans containing shares of a company’s own stock.

“We agree with the District Court that, even without the presumption of prudence rejected in Fifth Third, Plaintiffs have failed to plead plausibly that the Plan Committee Defendants breached their fiduciary duties under ERISA by failing to recognize the imminence of Lehman’s collapse,” the court ruled in a 14-page decision.

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S&P settles Australian lawsuit over Lehman Bros collapse

A substantial settlement has been reached in a landmark A$200 million ($143 million) class action brought against ratings agency Standard & Poor’s, according to the law firm for the local governments, churches and charities bringing the suit.

London-based law firm Squire Patton Boggs said on Saturday that the settlement, which is subject to court approval, is likely to have widespread international ramifications for similar actions against Standard & Poor’s (S&P) due to the number of products it rates throughout the world.

Financial terms of the settlement were confidential, Squire Patton Boggs said. Litigation funder IMF Bentham said it would generate revenue of about A$52 million and a pretax profit after capitalized overheads of around A$47 million as a result of the settlement.

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Lehman Gets Nod On $1.4B JPMorgan Settlement

Law360, New York (February 8, 2016, 7:38 PM ET) — A New York bankruptcy judge on Monday approved a $1.42 billion settlement to resolve most litigation between Lehman Brothers Holdings Inc. and JPMorgan over transactions that occurred in the runup to Lehman’s 2008 bankruptcy.

Lehman Brothers had accused JPMorgan of contributing to the investment bank’s epic downfall in September 2008. (Credit: AP) The deal, approved by U.S. Bankruptcy Judge Shelley Chapman, resolves two of the three major pieces of litigation Lehman had brought against JPMorgan and, when combined with a related release of a debtor deposit,…

Source: Law360

J.P. Morgan to Pay $1.42 Billion to Settle Lehman Claims

J.P. Morgan Chase & Co. has agreed to pay the remnants of Lehman Brothers Holdings Inc. $1.42 billion in cash to settle most of the failed investment bank’s lawsuit over claims that J.P. Morgan illegally siphoned billions of dollars from Lehman before its collapse.

Representatives for Lehman and J.P. Morgan declined to comment.

The settlement comes after a federal judge last fall ruled for J.P. Morgan, saying the bank didn’t abuse its leverage as Lehman’s primary clearing bank to force the investment bank to hand over more collateral in the weeks before its September 2008 collapse.

The deal, unveiled Monday night in a filing in U.S. Bankruptcy Court in New York, resolves the bulk of Lehman’s $8.6 billion lawsuit against J.P. Morgan and the bank’s counterclaims against Lehman. It also puts to rest Lehman’s challenges over J.P. Morgan’s closeout of thousands of derivatives contracts following the investment bank’s collapse.

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