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Protecting Client Money in the UKThe Lehman Cases

Protecting Client Money in the UKThe Lehman Cases 278 Capital Markets Law Journal, Vol. 5, No. 3 Protecting Client Money in the UK—The Lehman Cases Stephen Fletcher and Karen Butler-Libdeh* Key points This article considers the main findings of the English courts in relation to the treatment of client money held by Lehman Brothers International Europe Limited (LBIE) prior to its insolvency (the ‘Lehman judgment’) as well as the treatment of certain client money received by LBIE post-insolvency. The main objectives of the client money rules issued by the UK Financial Services Authority are to ensure that a firm cannot use client money for its own dealings, and that on insolvency, clients receive their money back in full. However, as the insolvency of LBIE has demonstrated, that may not always be the case in practice. The implications of the Lehman judgment and the Government’s response to the client money issues arising out of LBIE’s insolvency are also discussed. 1. Introduction The English courts have now had three occasions to look at how client money is protected under the United Kingdom Financial Services Authority’s (FSA) client money rules on an investment firm’s insolvency. Two of these judgments address the treatment of client money held by a firm prior http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Capital Markets Law Journal Oxford University Press

Protecting Client Money in the UKThe Lehman Cases

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Publisher
Oxford University Press
Copyright
The Author (2010). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org
ISSN
1750-7219
eISSN
1750-7227
DOI
10.1093/cmlj/kmq011
Publisher site
See Article on Publisher Site

Abstract

278 Capital Markets Law Journal, Vol. 5, No. 3 Protecting Client Money in the UK—The Lehman Cases Stephen Fletcher and Karen Butler-Libdeh* Key points This article considers the main findings of the English courts in relation to the treatment of client money held by Lehman Brothers International Europe Limited (LBIE) prior to its insolvency (the ‘Lehman judgment’) as well as the treatment of certain client money received by LBIE post-insolvency. The main objectives of the client money rules issued by the UK Financial Services Authority are to ensure that a firm cannot use client money for its own dealings, and that on insolvency, clients receive their money back in full. However, as the insolvency of LBIE has demonstrated, that may not always be the case in practice. The implications of the Lehman judgment and the Government’s response to the client money issues arising out of LBIE’s insolvency are also discussed. 1. Introduction The English courts have now had three occasions to look at how client money is protected under the United Kingdom Financial Services Authority’s (FSA) client money rules on an investment firm’s insolvency. Two of these judgments address the treatment of client money held by a firm prior

Journal

Capital Markets Law Journal – Oxford University Press

Published: Jul 15, 2010

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