Lehman repo seller seeks return of tendered $250 million security

By Caroline Salls

Pittsburgh, Sept. 29 - Lehman Brothers, Inc. repurchase agreement party Friedman, Billings, Ramsey Group, Inc. filed a lawsuit Friday against the Securities Investor Protection Corp., Lehman Brothers Holdings, Inc.'s liquidation trustee James W. Giddens and Lehman Brothers, Inc. in connection with an alleged repurchase agreement default.

According to the lawsuit filed with the U.S. Bankruptcy Court for the Southern District of New York, an Act of Insolvency, an event of default and the repurchase date all occurred on Sept. 19 under the repurchase agreement.

The plaintiff said it subsequently tendered the repurchase price to the defendants, and, as a result, the defendants are obligated to return a $250 million Fannie Mae mortgage-backed security owned by Friedman, Billings, Ramsey.

Despite repeated requests "and no legal or contractual basis for delay," Friedman, Billings, Ramsey said the defendants have refused to return the security.

Given the current SIPA insolvency proceeding and the liquidation of Lehman Brothers, Inc., the plaintiff said it would "suffer irreparable harm" if the court does not confirm that an Act of Insolvency, event of default and the repurchase date occurred on Sept. 19, that the defendants refused to accept the tender, that the security belongs to Friedman, Billings, Ramsey, and the defendants are obligated to return it.

New York-based Lehman Brothers Holdings is the fourth largest investment bank in the United States. The company filed for bankruptcy on Sept. 15. Its Chapter 11 case number is 08-13555.

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