--- title: "Lehman Brothers Inc.: the broker-dealer and its liquidation" language: en canonical: https://dossiertwist.com/dossiers/lehman-brothers-holdings/lehman-brothers-inc/ as_of: 2026-10-14 keywords: ["Lehman Brothers Holdings","LBHI","Repo 105","Valukas examiner report","Ernst & Young","Chapter 11","Lehman Brothers Inc.","SIPA liquidation","Lehman Brothers Treasury Co.","Lehman Brothers Bankhaus","Lehman Brothers International (Europe)","Plan Trust","Alvarez & Marsal","Richard Fuld","Aurora Loan Services","BNC Mortgage","JPMorgan Chase","Barclays Capital","American Express","Lehman Brothers Special Financing"] --- # Lehman Brothers Inc.: the broker-dealer and its liquidation **Question.** What regulatory actions concerned Lehman Brothers Inc., and how was it liquidated? **Answer.** Lehman Brothers Inc. (LBI) was LBHI's wholly owned Delaware broker-dealer. NASD censured and fined it in 2002 and a court enjoined it in 2003 in an SEC case over research-analyst conflicts, in both cases with LBI's consent and without admitting or denying the allegations. From September 19, 2008 it was liquidated under the Securities Investor Protection Act by trustee James W. Giddens, who reported that customers were satisfied at 100% of net equity and general unsecured creditors received at least 41.2841%; the case was closed in September 2022. ## The firm - Analysis: Lehman Brothers Inc. was a Delaware corporation and broker-dealer registered under Section 15 of the Securities Exchange Act, wholly owned by LBHI, at 745 Seventh Avenue, New York; FINRA identifies it by Central Registration Depository number 7506. [src-005] [src-085] ## Regulatory and enforcement records - Analysis: According to NASD's August 2002 summary of disciplinary actions, NASD found that the firm failed to use reasonable diligence to obtain the best inter-dealer market for customer orders and committed related order-handling and short-sale violations. The firm consented to the sanctions and findings without admitting or denying the allegations, and was censured, fined $23,000 and ordered to pay $568.75 plus interest in restitution. [src-085] - Analysis: A December 2003 SEC notice in the Federal Register describes Securities and Exchange Commission v. Lehman Brothers Inc. (03 Civ. 2940, S.D.N.Y.), in which the SEC alleged that Lehman's practices gave its investment banking business inappropriate influence over its research analysts. Lehman consented to an injunction, disgorgement and penalties without admitting or denying the allegations, and expected related settlements with state agencies; the court entered the injunction on October 31, 2003, and the same day the SEC temporarily exempted affiliates from the resulting disqualification under the Investment Company Act. [src-095] - Analysis: A commercial sanctions and politically-exposed-persons database lists Lehman Brothers Inc. under the topic of regulatory action, with ten undated entries attributed to FINRA. The listing records regulatory actions and is not a sanctions designation; it gives no dates, programmes or registration number tying each entry to the firm. [src-022] [src-009] ## The SIPA liquidation - Analysis: The liquidation (Case No. 08-01420), begun on September 19, 2008, was conducted by trustee James W. Giddens with the law firm Hughes Hubbard & Reed LLP, where the court's mediator profile describes him as a partner and chair of the bankruptcy group and as an adviser to the Securities Investor Protection Corporation for 30 years. LBI sold assets to Barclays under a sale order entered in the SIPA proceeding. [src-049] [src-126] [src-064] - Analysis: According to the trustee, he administered more than $123 billion: over 110,000 customer accounts worth more than $92 billion were transferred to Neuberger Berman, Barclays Capital Inc. and other broker-dealers, $13.5 billion was distributed through the customer claims process, and all former securities customers were satisfied at 100% of net equity through settlements he negotiated with LBHI and LBIE. General unsecured creditors received at least 41.2841%, about $9.4 billion. In July 2017 the court upheld his decision to subordinate the claims of about 350 former executives and select employees under their Executive and Select Employee Plan. The court closed the case on September 28, 2022 and all allowed general unsecured claims were exchanged for interests in the LBI Liquidating Trust. [src-049] [src-126] ## Sources - [src-005] Schedule 13D filed by Lehman Brothers Holdings Inc. regarding GLG Partners, Inc. (with annex of directors and executive officers), U.S. Securities and Exchange Commission (EDGAR), 2007-11 - [src-085] NASD disciplinary actions reported for August 2002, FINRA (formerly NASD), 2002-08 - [src-095] Lehman Brothers Inc., et al.; notice of application (Release No. IC-26263), Federal Register (U.S. Securities and Exchange Commission notice), 2003-12-01 - [src-022] Sanctions list source · src-022 - [src-009] Sanctions list source · src-009 - [src-049] Court record source · src-049 - [src-126] Company statement source · src-126 - [src-064] Mediator profile of James W. Giddens, U.S. Bankruptcy Court for the Southern District of New York, U.S. Bankruptcy Court, S.D.N.Y., 2013-01-03