SIPC to file Lehman liquidation proceeding Friday

The Securities Investor Protection Corp. today announced plans to place Lehman Brothers Inc. into liquidation.

SIPC president, Stephen Harbeck, said that SIPC will file a proceeding placing LBI in liquidation Friday. “After extensive discussions and consultation with representatives of the firm and its parent company, as well as representatives of the Securities and Exchange Commission, the Federal Reserve, the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority and others, SIPC has decided that such action is appropriate for the protection of customers and to facilitate the transfer of customer accounts of LBI and an orderly unwinding of the business of the brokerage firm,” he said.

This action is being taken in connection with a proposed sale of the business of the broker-dealer to Barclays Capital Inc., it noted, adding that a hearing on approval of that sale in the Chapter 11 proceeding of Lehman’s parent company will also take place Friday.

Harbeck stressed that SIPC’s initiation of the proceeding is designed to “minimize market disruption and to allow the transfer of assets and customer accounts of LBI to close in a timely manner”. It will ask the court to allow the trustee to operate the business of the firm for a limited time so that normal operations can continue.

IE