Barclays Transfers From Lehman May Have Violated Securities Law, SEC Says

Barclays Plc got two transfers totaling about $1.3 billion from Lehman Brothers Holdings Inc. in September 2008 that may have violated securities laws, the U.S. Securities and Exchange Commission said.

The U.K. bank got $769 million in securities held in the Lehman brokerage’s reserve bank account, and $507 million in assets listed as a debit item in the brokerage’s customer reserve, when it bought defunct Lehman’s brokerage, Lehman Brothers Inc., the SEC said in a filing yesterday in U.S. Bankruptcy Court in Manhattan.

The transfers would violate securities law if they increased the deficiency in the accounts, “and LBI would not have sufficient funds to satisfy all claims of the remaining customers,” the SEC said.

The SEC’s filing comes amid a bankruptcy court trial of Barclays, which is accused by Lehman of making an $11 billion “windfall” on its purchase of the brokerage.

“The sale transaction that was disclosed to the court was based upon false premises from the very outset,” Lehman’s lawyer, Robert Gaffey, told U.S. Bankruptcy Judge James in a court filing yesterday that is his last chance to sway the judge.

Peck may rule on Lehman’s yearlong lawsuit against Barclays in January or February, said lawyers in the case.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Joshua Gallu in Washington at jgallu@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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