More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
The biggest bankruptcy in history saw the beginning of the end on Tuesday, as the reorganization plan of Lehman Brothers Holdings Inc. to exit bankruptcy in early 2012 was granted approval by U.S. Bankruptcy Judge James Peck. The firm declared bankruptcy in September 2008, taking the financial crisis to a new level.
Reuters reported that Peck granted approval for Lehman to exit bankruptcy no earlier than Jan. 31, with payouts to creditors to begin in 2012. Depending on the type of debt, unsecured creditors will receive between 21 and 28 cents on the dollar. Stockholders will get nothing.
All that remains of the formerly huge investment bank and brokerage is a collection of assets including real estate, private equity and banking investments. The sum of $65 billion remains out of an original asset base of $639 billion at the time of the bankruptcy declaration; that $65 billion will be returned to creditors possessing some $450 billion in claims. That group includes debt investors and trading partners from before the bankruptcy, such as Goldman Sachs. Fees for advisors and attorneys for the bankruptcy have totaled about $1.5 billion.
During the exit, Lehman will continue to manage its holdings in real estate company Archstone, banks, asset manager Neuberger Berman and private equity. Lawsuits have raged during the term of the bankruptcy, leases were terminated, and assets ranging from artwork to whole divisions were sold off. Thousands of employees were left jobless. Investigations were launched by government agencies into the actions of Lehman executives, including its CEO, Richard Fuld.
Peck has spent more than three years supervising the bankruptcy, and told those in the courtroom, "My world changed when the Lehman cases were assigned to me, and so did yours."