Lehman Brothers May Still Cash In on Its Own Big Short From 2009
- Defunct bank could reap windfall on pre-crisis CDS trades
- Insurer incorrectly settled valuable credit bets, suit alleges
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Derivatives Lehman Brothers purchased to guard against defaults on the subprime-mortgage bonds that fueled the 2008 crisis could deliver a big pay-out more than 10 years after the bank’s collapse.
Lehman Brothers International Europe, or LBIE, a London-based subsidiary of the defunct bank, is taking bond-insurance firm Assured Guaranty Ltd. to court over decade-old claims that a swath of credit-default swaps it had bought were incorrectly settled in 2009. A trial to resolve the matter started in New York state court on Monday, with Justice Melissa Crane presiding over a virtual hearing.