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Jul 15, 2015

The Second Circuit Holds That Claims Against Lehman Brothers Related to Bilateral Repurchase Transactions Do Not Qualify for Customer Status

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On June 29, 2015, the United States Court of Appeals for the Second Circuit affirmed the decision of the United States Bankruptcy Court for the Southern District of New York, which held that claims asserted by counterparties in relation to bilateral repurchase agreements do not qualify for treatment as customer claims under the Securities Investor Protection Act of 1970 (“SIPA”). The Court of Appeals found that the appellant was not a customer for purposes of SIPA, because a customer must have entrusted assets to a failed broker-dealer, and the repurchase agreements at issue did not involve the entrustment of assets to Lehman Brothers, Inc. This is the second circuit-level decision to hold that repurchase agreement transactions fail to give rise to customer claims under SIPA.

View memo, The Second Circuit Holds That Claims Against Lehman Brothers Related to Bilateral Repurchase Transactions Do Not Qualify for Customer Status

Authors and Contributors

Fredric Sosnick

Partner

Financial Restructuring & Insolvency

+1 212 848 8571

+1 212 848 8571

New York

Solomon J. Noh

Partner

Financial Restructuring & Insolvency

+44 20 7655 5795

+44 20 7655 5795

London

Joel Moss

Partner

Financial Restructuring & Insolvency

+1 212 848 4693

+1 212 848 4693

New York