SRP has confirmed Barclays will not assume the liabilities attached to any of Lehman Brother’s live structured products, following its acquisition of the North American investment banking and capital markets operations of the failed investment bank.The news is likely to leave many structured products investors waiting in line behind Lehman's loan, lien and bondholders in order to recoup their investments, if they can.
SRP data shows that at least 350 Lehman-issued structured products are still outstanding, excluding certificates of deposit.
Although Lehman Brothers officially filed Chapter 11 bankruptcy documents with the New York bankruptcy court on Monday 15 September, the firm priced three US reverse convertible structured products as recently as 9 September, just four business days previously.
According to documents filed with the SEC, the three notes, separately linked to the performance of General Electric, Microsoft and Visa, collectively sold $736,000.
Lehman Brothers also filed a structured investments marketing brochure with the SEC on 29 August. The six-page brochure includes diagrams showing how a variety of Lehman's structured products work, including steepener notes, range accrual notes, auto callable notes, buffered return enhanced notes and principal protected notes.
The brochure’s risk disclosure section painfully reminds us that, “Investors will be exposed to the credit of the issuer.”
