September 15, 2008 / 9:25 PM / 11 years ago

SIPC says Lehman brokerage accounts intact

WASHINGTON (Reuters) - Lehman Brothers’ LEH.N LEH.P brokerage customers’ cash, stocks and other securities are accounted for, the Securities Investor Protection Corp (SIPC) said on Monday.

SIPC, which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms, said it has not started a liquidation proceeding against the broker-dealer Lehman and does not anticipate doing so.

“SPIC did not take any action because it wasn’t necessary. All customer property is there,” said Stephen Harbeck, the president of the investor protection group.

The brokerage’s holding company, Lehman Brothers Holdings Inc, filed for bankruptcy early Monday morning after it failed to find a buyer. That left Lehman’s brokerage customers wondering how they would access their accounts and whether their investments were safe.

Regulators quickly sought to reassure the public. The U.S. brokerage watchdog, the Financial Industry Regulatory Authority, said Lehman’s brokerage units — Lehman Brothers Inc and Neuberger Berman LLC — were in good standing.

The chairman of the U.S. Securities and Exchange Commission, Christopher Cox, reiterated that the SEC was focused on making sure that the some 83,000 Lehman customers are protected.

Lehman Brothers, the broker-dealer, “is doing business per normal. If you are one of those 83,000 you can deal with Lehman Brothers as you always have,” Cox told CNN television. “We are looking forward to very, very quickly resolving it outside of bankruptcy so that customer cash and customer securities are fully preserved.”

Under the supervision of the SEC and FINRA, Lehman Brothers’ customer accounts would be transferred to another brokerage firm.

It was unclear how long it would take to transfer the accounts or whether other brokerages will be bidding for them, the regulators said.

“The direct impact on investors, customers should be nominal,” said Henry Klehm, a securities lawyer at Jones Day.

“The real challenge will be customers with large margin positions, people involved in swaps where Lehman was a counterparty, where Lehman was not just the broker,” he said.

Reporting by Rachelle Younglai; Editing by Tim Dobbyn, Leslie Gevirtz

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