Appeal ruling allows hedge funds to access Lehman funds

The Court of Appeal has ruled that hedge funds whose money was not properly ringfenced when Lehman Brothers went into administration will have access to client money deposited with the UK division of the bank, Lehman Brothers International (Europe) (LBIE).

The judgment overturns a decision handed down by Mr Justice Briggs in December, which stated that the investors whose money had not been segregated when the investment bank collapsed would not have access to the client money pool.

The appellate court has referred the case back to Briggs J to give further guidance on how the client money funds should be traced, prompting warnings of further disputes over exactly what funds should be included in the client money pool and who is entitled to a share.

PricewaterhouseCoopers partner Tony Lomas, who is a joint administrator of LBIE and instructed Linklaters partner Stephen Fletcher to represent it in the CoA, said the judgment was “likely to have a significant knock-on effect both on the timing and level of any distribution of client money to LBIE’s clients”.

However, Simmons & Simmons partner Robert Turner, who was instructed to act for lead appellants CRC Credit Fund, said the ruling gave investors added protections: “It’s a decision that makes good sense and means investor protection is not forfeited simply because an investor puts money with a firm that it turns out failed to comply with its regulatory obligations.”



Simmons & Simmons partner Robert Turner instructed 4 Stone Buildings’ Robert Miles QC to lead Richard Hill of the same set for CRC Credit Fund.

Norton Rose partner Hamish Anderson instructed 3 Verulam Buildings’ John Jarvis QC to lead James Evans and Richard Brent of the same set to act for Lehman Brothers Inc.

Field Fisher Waterhouse partner Duncan Black instructed Maitland Chambers’ Jonathan Russen QC for Lehman Brothers AG.

Weil Gotshal & Manges instructed Erskine Chambers’ Richard Snowden QC to lead Ben Shaw to act for Lehman Brothers Holdings.


Allen & Overy partner Jennifer Marshall instructed 3-4 South Square’s Antony Zacaroli QC to lead David Allison and Adam Al-Attar of the same set for GLG Investments Plc Sub-Fund: European Equity Fund.

Baker McKenzie partner instructed Arun Srivastava Maitland Chambers’ Nicholas Peacock QC to lead Catherine Addy of the same set to act for Hong Leong Bank Berhad

Linklaters partner Stephen Fletcher instructed 20 Essex Street’s Iain Milligan QC to lead Maitland Chambers’ Rebecca Stubbs for the Administrators of Lehman Brothers International (Europe)

Interested party:

The Financial Services Authority directly instructed Erskine Chambers’ David Mabb QC to lead Stephen Horan of the same set