Bank of America's brazen Lehman asset grab!
LONDON, England - November 17, 2010 - Bank of America's seizure of $500 million from Lehman Brothers during the depths of the financial crisis has been condemned as 'brazen' by a U.S. judge, who ordered the money be returned.
The bank seized the cash from Lehman in November 2008, just weeks after the former Wall Street giant had filed the biggest bankruptcy in U.S. corporate history. Lehman, a customer of Bank of America, had been forced to post the cash in August as collateral amid escalating fears for the lender's survival.
"The actions taken were surprising and, quite frankly, disappointing for a leading financial institution that should care a great deal about its reputation," Judge James Peck of the U.S. Bankruptcy Court wrote in a 46-page opinion released on Wednesday. Bank of America's decision to take back the funds was in violation of U.S. bankruptcy law, which prevents creditors seizing any assets.
The ruling is a significant victory for Lehman as it tries to recoup some of the billions of dollars it owes creditors following its bankruptcy filing on September 15, 2008. The bank is pursuing JPMorgan Chase for more than $8 billion and has taken legal action to recover what it alleges was an unfair $11 billion windfall that Barclays secured when it purchased Lehman's U.S. business.
