WASHINGTON (AP) — JPMorganChase & Co. will return assets worth $800million to lawyers representing the brokerage arm of failed investment bank Lehman Brothers Holdings Inc.
The cash and securities will be distributed to customers who held accounts with the brokerage, Lehman Brothers Inc., the lawyers said Thursday.
JPMorgan controlled the assets because it was the broker-dealer's clearing bank. A clearing bank acts as an intermediary, processing transactions in the securities markets on behalf of a brokerage.
JPMorgancooperated with the court-appointed lawyers seeking to recover assets for Lehman's customers. It held onto the assets until a formal deal could be struck.
A spokesman for JPMorgan said the settlement will not affect the bank financially.
Lehman's bankruptcy filing in September 2008 helped spark a credit crisis that plunged the nation into its deepest recession since the Great Depression.
The trustees for Lehman's brokerage are operating under the Securities Investor Protection Act, which was designed to protect customers of broker-dealers that fail.
Under that law, court-appointed lawyers seek to recover assets for a failed company's estate by bringing actions against those who are believed to owe the company money. The lawyers then seek to divide the assets fairly between customers of the failed company.
The trustee for Lehman Brothers Inc. called the JPMorgan settlement a "milestone" in his efforts.
"The agreement will increase funds held by the LBI Estate available for distribution to public customers of LBI by more than $800million in cash and securities and is a direct result of cooperation and professionalism by both parties in working through complex and difficult issues," SIPA trustee James Giddens said in a statement.