New Ruling on Lehman’s Money
Hedge funds will now be allowed to have access to billions of dollars of Lehman Brothers’ UK division after they won a court ruling in London.
The Financial Times reported that the Court of Appeal overturned a previous decision on Monday that said that only the clients of Lehman Brothers could have a share of the pool of client money. The money was segregated for the Lehman clients and it was worth as much as $2 billion.
Other hedge funds client firms had appealed against this decision by the court and the case was being tried by the Court of Appeals in London.
The new ruling by the court means that now all clients, including those who had hedge funds whose money had not been properly ring fenced by the company could now demand a share from the client money pool.
Pricewaterhouse Coopers, who are the administrators of Lehman Brothers, the latter of which went belly-up in 2008, has warned that the new ruling may cause a “significant knock-on effect” on the level and timing of the distribution of Lehman Brother’s client money.
Pricewaterhouse Coopers is one of the Big 4 accountancy firms and controls a major part of UK’s audit market.
Before Lehman failed in the September of 2008, it had ring faced some of the client money for some hedge funds such as Paragon Capital Management Fund and GLG Investments. But it had not segregated the money for other hedge funds such as the CRC Credit Fund. The affiliates of New York-based Lehman were also missed.
Tony Lomas, who is partner at Pricewaterhouse Coopers and one of LBIE’s joint administrators, said that the new ruling would mean proper and prompt payment of the client money be done and that “we remain committed towards achieving that objective.”