NEW YORK, April 21 (Reuters) - JPMorgan Chase & Co will
return more than $800 million of cash and securities to resolve
claims by the trustee for Lehman Brothers Holdings Inc's
brokerage after the sides agreed how best the assets should be
distributed to customers.
James Giddens, the court-appointed trustee for the bankrupt
brokerage, called the settlement "a milestone" in his efforts
to recover money for the customers.
JPMorgan was the brokerage's "clearing" bank, in which it
acts as a go-between in Lehman dealings with other parties and,
in that role, held various of its assets, court papers show.
In a filing with the U.S. bankruptcy court in Manhattan,
Giddens said the accord "would substantially increase the fund
of customer property" available for distribution, "without the
uncertainty and delay of litigating disputed claims."
The assets include $755 million of cash and about $106
million of securities, the filing said. Court approval is
needed for the settlement.
"This is the biggest affirmative settlement we have had for
customers" and "several thousand" of them could ultimately
share in proceeds, James Kobak, a partner at Hughes, Hubbard &
Reed LLP representing the trustee, said in an interview.
JPMorgan, the second-largest U.S. bank, said in a statement
the main source of the returned assets will be from funds that
the bank had set aside pending a resolution with the trustee.
The settlement will have no material financial impact on
JPMorgan, the New York-based bank said.
"We worked closely with the trustee and determined the
assets belonged with the the customer claimants," JPMorgan
spokesman Joe Evangelisti said.
Giddens gets his powers through the Securities Investor
Protection Act, a 1970 law designed to protect customers of
failed brokerages.
Once the fourth-largest U.S. investment bank, Lehman filed
for Chapter 11 protection on Sept. 15, 2008, in what remains by
far the largest bankruptcy in U.S. history.
Lehman's parent separately sued JPMorgan, accusing it of
taking advantage of inside details it learned as a clearing
bank to extract $8.6 billion of desperately needed assets in
the last few days before the bankruptcy.
The case is In re: Lehman Brothers Inc, U.S. Bankruptcy
Court, Southern District of New York, No. 08-01420.
(Reporting by Jonathan Stempel in New York)