Client Assets Update - LBI SIPC Claims - 30/9/2010

This update concerns LBIE's SIPC Customer Omnibus Claim ("Omnibus Claim") against Lehman Brothers, Inc. ("LBI").  For further information on LBI and the SIPC process, please refer to previous updates and administration Progress Reports dated 14th April 2009, 14th October 2009 and 7th July 2010.

Over the last months LBI has provided the Joint Administrators with reconciliation details on substantially all of the securities contained in LBIE's Omnibus Claim. The Joint Administrators have put a robust process in place within LBIE to verify the data provided by LBI against LBIE books and records and to compare it against Trust Asset clients' submissions made via the Client Asset Portal.  Where input from LBIE clients has been required, LBIE teams have been contacting the relevant claimants directly.

LBIE received a partial determination of its Omnibus Claim from the SIPA Trustee on 16 September 2010 (the "Determination"). The Determination states that the LBIE Omnibus Claim for securities has been allowed for a defined list of securities and quantities.  LBIE's initial review indicates that there are a significant number of securities where the Joint Administrators will question the Determination.  The SIPA Trustee has deferred his determination in respect of cash balances owed to LBIE clients for a minimum of 30 days and, with respect to commodities & futures, LBIE's claim has been denied. A substantial amount of work will be required to be undertaken in conjunction with the SIPA Trustee’s advisors in order to complete the reconciliation of the Omnibus Claim with the Determination.

SIPC rules allow LBIE to object to the Determination. The SIPA Trustee has advised LBIE that the SIPC 30-day objection period will be extended to 90 days, without prejudice to further requests for extensions of time. LBIE will continue to work closely with the SIPA Trustee and his advisors during this objection period to resolve outstanding issues and to provide necessary information to assist the SIPA Trustee in evaluating LBIE’s questions or objections.  This work is expected to reduce differences or disagreements that may have to be more formally contested later in the process.

The issuance of this Determination should not be viewed as an indication that assets will be returned by LBI in the near term. The Joint Administrators are aware that there are a number of material claims that the SIPA Trustee will have to work through before a distribution may be contemplated.

Should you have any queries regarding this update, please contact LBIE's Communications and Counterparty Management team at generalqueries@lbia-eu.com.  As always, the Joint Administrators will continue to communicate with you through this website on all matters relating to the administration of LBIE.