UK court rules Lehman Bros clients can claim cash

LONDON - The British supreme court ruled cash earmarked as belonging to clients when Lehman Brothers International collapsed should be divided up among all its clients, including those whose cash the investment bank had mixed with its own.
By law, firms must keep money they trade on clients' behalf separately to their own, keeping it safe from creditors seeking to recuperate losses in the event of a bankruptcy.
The ruling said that Lehman Brothers International failed to do this "on a truly spectacular scale".
The firm kept $2.16 billion of client money separately, but mixed far greater sums of others with its own, causing vast confusion when subprime mortgage losses caused it to collapse in 2008, marking the height of the financial crisis.
The ruling may affect clients of U.S. futures trader MF Global UK, who are struggling to recover their cash following the firm's collapse last year.
Lehman "routinely" failed to treat options and derivatives transactions as client money, the ruling said.
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