Supreme Court Rules on Lehman Client Money

The Supreme Court

February 29, 2012

The Supreme Court has handed down its judgment on the treatment of client money that had not been segregated, or that had been improperly segregated, as at the date that Lehman Brothers International (Europe) ("LBIE") entered into administration.

In its ruling, the Court determined that:

(i) a statutory trust arose when LBIE received the money and not on segregation;

(ii) money does not have to be in a client account to be client money, but can equally be held in a house account of an insolvent firm; and

(iii) clients whose cash had not been properly separated on LBIE's entry into administration (but should have been) could share in the client money pool.