Wall Street investment bank Lehman Brothers has filed for chapter 11 bankruptcy protection after emergency talks to find a buyer failed.

The firm said it would file a petition under Chapter 11 with the U.S. Bankruptcy Court for the Southern District of New York.

None of the broker-dealer subsidiaries, or other Lehman subsidiaries, will be included in the Chapter 11 filing and they will continue to operate. “Customers of Lehman Brothers, including customers of its wholly owned subsidiary, Neuberger Berman Holdings, LLC, may continue to trade or take other actions with respect to their accounts,” Lehman explained in a release.

The firm said its board authorized the filing in order to protect its assets and maximize value. In conjunction with the filing, Lehman intends to file a variety of first day motions that will allow it to continue to manage its operations, including requests to make wage and salary payments and continue other benefits to its employees.

Lehman added that it is exploring the sale of its broker-dealer operations and, is in “advanced discussions” with a number of potential purchasers to sell its investment management division. It added that it intends to pursue those discussions as well as a number of other strategic alternatives.

Meanwhile, the U.S. Securities and Exchange Commission announced Sunday that it is working with the U.S. Treasury, the Federal Reserve to ensure that Lehman Brothers’ clients won’t be hurt by the bank’s possible failure.

The SEC said it is taking actions to ensure that customers of Lehman Brothers Inc., the U.S. regulated broker-dealer subsidiary of Lehman Brothers Holdings Inc., “will not be adversely affected by recent market events”. Among other things, the SEC is enforcing continued compliance with net capital and customer asset protection rules, and ensuring continued customer access to their cash and securities.

It noted that the broker-dealer’s customers benefit from protections under securities rules, including segregation of customer securities and cash, as well as insurance by the Securities Investor Protection Corp. Any actions by Lehman Brothers Holdings would not affect the SIPC protection applicable to the firm’s customers, it added. These safeguards are designed to ensure that the broker-dealer’s customers will be protected, the SEC said.

SEC staff who have been on-site at the U.S. broker-dealer will remain in place in coming weeks. The SEC is also coordinating with overseas regulators to protect Lehman’s customers and to maintain orderly markets.

“For several days, we have worked closely with regulators around the world including the FSA in the United Kingdom, the BaFin in Germany, and the FSA in Japan, as well as our counterparts in other markets around the world, to coordinate our actions in the interest of orderly markets,” said SEC chairman Christopher Cox. “In doing so we have also worked closely with the Treasury and the Federal Reserve and market participants. We are committed to using our regulatory and supervisory authorities to reduce the potential for dislocations from recent events, and to maintain the smooth functioning of the financial markets.”

IE