UK - Lawyers acting for two UK pension funds are now reviewing the terms of the current securities class action against Lehman Brothers and its directors following last week's collapse of the company, to work out whether the action will now have to be taken against Barclays Group plc.

Lothian Pension Fund and the Northern Ireland Local Government Officer Superannuation Committee (NILGOSC) were granted co-lead plaintiff status in August in a case against Lehman Bros concerning their mortgage-backed securities, however lawyers at Labaton Sucharow are now trying and unravel the technicalities of Lehman's corporate ownership to assess who the case might now be directed at. (See earlier IPE story: UK pension funds co-lead in Lehman Bros action)

Investors are still keen to pursue both elements of case so far filed - against Lehman as a company and the separate line against Lehman directors and named individuals - according to Thomas Dubbs, partner at Labaton Sucharow.

But substantial work is now needed to ascertain whether the case can be re-filed against Lehman's North America investment banking division, as it is due to fall under the ownership of the Barclays Capital division once its takeover is completed.

"Lothian, as co-lead plaintiff in the action against Lehman Brothers, is actively reviewing its litigation options including proceedings against those entities, including the investment bank, which do not appear to fall under the protection of the bankruptcy proceedings," said Dubbs.

"Lothian also intends to rigorously pursue its litigations against the Lehman officers and directors that have been named in the action," he added.
The case was never going to be a simple one prior to the Lehman collapse but additional work is now going to be required by the New York-based legal firm to try and understand what official entities of the Lehman business it has to file the case against, and how that might change proceedings as a result.

If it can be proven the Lehman Brothers securities were issued by the North American arm of the investment bank rather than the offiicial holding company - which has filed Chapter 11 bankruptcy - and all information concerning its mortgage-backed business is recognised as originating from there, Labaton Sucharow will have to rework the documents on behalf of the pension funds to sue Barclays plc for losses incurred through Lehman Brothers' investment banking division.

If technicalities of the corporation show the securities were issued under the now defunct Lehman Brothers Holdings company, the documents would have to be re-filed through the bankruptcy courts in the hope of entering estimation proceedings to place shareholders on the list of creditors to the firm.

In either case, the pension funds are still pursuing their class action against Dick Fuld, chairman and chief executive of Lehman Brothers prior to its collapse, alongside other directors and named defendants.

What general impact has this week's turmoil had on your pension scheme assets or those of your clients, and are there any long-term implications? If you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email