'Repo' Claims Aren't Protected By SIPA, Judge Rules

Law360, Los Angeles (June 25, 2013, 10:55 PM EDT) -- A New York federal bankruptcy court ruled Tuesday that repurchase transaction claims can't be protected like customer claims in the Securities Investor Protection Act liquidation of Lehman Brothers Inc. because a group of banks didn't entrust property for safekeeping by the broker-dealer.

U.S. District Judge James M. Peck sided with James W. Giddens, trustee for Lehman's SIPA liquidation, who argued that the repos were proprietary contractual transactions and that the former securities customers' losses arising from Lehman's bankruptcy weren't customer property as defined by SIPA....
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