Lehman Brothers Holdings Inc. was a global financial-services firm. The firm did business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking. It was a primary dealer in the U.S. Treasury securities market On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection; the filing marks the largest bankruptcy in U.S. history. The following day, Barclays plc announced its agreement to purchase, subject to regulatory approval, Lehman's North American investment-banking and trading divisions along with its New York headquarters building. On September 20, 2008, a revised version of that agreement was approved by Judge James Peck
- In 2003, the company was one of ten firms which simultaneously entered into a settlement with the U.S. Securities and Exchange Commission (SEC.
- In August 2007, the firm closed its subprime lender, BNC Mortgage, eliminating 1,200 positions in 23 locations, and took an after-tax charge of $25 million and a $27-million reduction in goodwill.
- Lehman said that poor market conditions in the mortgage space "necessitated a substantial reduction in its resources and capacity in the subprime space".
August 22, 2008, shares in Lehman closed up 5% (16% for the week) on reports that the state-controlled Korea Development Bank was considering buying the bank.
- In 2008, Lehman faced an unprecedented loss to the continuing subprime mortgage crisis. Lehman's loss was apparently a result of having held on to large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages; whether Lehman did this because it was simply unable to sell the lower-rated bonds, or made a conscious decision to hold them, is unclear. In any event, huge losses accrued in lower-rated mortgage-backed securities throughout 2008.
- In the second fiscal quarter, Lehman reported losses of $2.8 billion and was forced to sell off $6 billion in assets.[ In the first half of 2008 alone, Lehman stock lost 73% of its value as the credit market continued to tighten.
- In August 2008, Lehman reported that it intended to release 6% of its work force, 1,500 people, just ahead of its third-quarter-reporting deadline in September.
September 9, when Lehman's shares plunged 45% to $7.79, after it was reported that the state-run South Korean firm had put talks on hold. Investor confidence continued to erode as Lehman's stock lost roughly half its value and pushed the S&P 500 down 3.4%. TheDow Jones lost 300 points the same day on investors' concerns about the security of the bank. The U.S. government did not announce any plans to assist with any possible financial crisis that emerged at Lehman.
September 10 , Lehman announced a loss of $3.9 billion and their intent to sell off a majority stake in their investment-management business, which includes Neuberger Berman. The stock slid 7 percent that day. Lehman, after earlier rejecting questions on the sale of the company, was reportedly searching for a buyer as its stock price dropped another 40 percent on September 11, 2008
September 13, Timothy F. Geithner, the president of the Federal Reserve Bank of New York called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets. Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale.
September 14, The New York Times reported that Barclays had ended its bid to purchase all or part of Lehman and a deal to rescue the bank from liquidation collapsed. Leaders of major Wall Street banks continued to meet late that day to prevent the bank's rapid failure. Bank of America's rumored involvement also appeared to end as federal regulators resisted its request for government involvement in Lehman's sale.
The International Swaps and Derivatives Association (ISDA) offered an exceptional trading session on Sunday, to allow market participants to offset positions in various derivatives on the condition of a Lehman bankruptcy later that day.
In New York, shortly before 1 a.m. the next morning, Lehman Brothers Holdings announced it would file for Chapter 11 bankruptcy protection citing bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion. It further announced that its subsidiaries will continue to operate as normal. A group of Wall Street firms agreed to provide capital and financial assistance for the bank's orderly liquidation and the Federal Reserve, in turn, agreed to a swap of lower-quality assets in exchange for loans and other assistance from the government.
September 15, Lehman shares tumbled over 90% .The Dow Jones closed down just over 500 points on the same day. This was the largest drop in a single day since the days following the attacks on September 11, 2001.The conditions on Lehman's trading floors that day appeared grim; one-third of the sales force were absent.
September 16, In the United Kingdom, the investment bank went into administration with Price waterhouse Coopers appointed as administrators. In Japan, the Japanese branch, Lehman Brothers Japan Inc., and its holding company filed for civil reorganization in Tokyo District Court.
Barclays plc announced that they will acquire a "stripped clean" portion of Lehman for $1.75 billion. This portion includes the Lehman headquarters building in the Times Square area of New York City, two data centers and the bulk of Lehman's trading and debt security operations, which will become part of Barclays Capital, a division of Barclays plc.
September 17,The New York Stock Exchange delisted Lehman Brothers. Its old symbol,
"LEH", has been replaced by the new symbol, "LEHMQ" on the Pink Sheets.
18 September, Paul Brough, Edward Middleton and Patrick Cowley
of KPMG China become the provisional liquidators appointed over
Lehman's two Hong Kong based units - Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited. They are also
appointed as the provisional liquidators for three further Hong Kong
based Lehman Brothers companies, Lehman Brothers Asia Holdings Limited,
Lehman Brothers Asia Limited and Lehman Brothers Commercial Corporation
September 20, The transaction was approved by U.S. Bankruptcy Judge James Peck, who stated that, "I have to approve this transaction because it is the only available transaction" with a final reduced price of $1.3 billion after re-evaluation of asset prices.
Lehman's bankruptcy is
the largest failure of an investment bank since Drexel Burnham Lambert
collapsed amid fraud allegations 18 years ago.