CarVal UK Ltd. v. Giddens (In The Matter of Lehman Brothers, Inc.)

Citation:
No. 14-890, Slip Op. (2d Cir. June 29, 2015)
Tag(s):
Ruling:
The appellant was not a customer for purposes of the Securities Investor Protection Act because the Court's precedents require that a customer must have "entrusted" asset to a failed broker-dealer.
Procedural context:
On appeal from district court.
Facts:
The appellant's predecessor entered into a series of repurchase agreements, which involved the sale of securities to Lehman Brothers, coupled with an agreement to repurchase the securities from Lehman at a future date. Before the securities were repurchased, Lehman failed and entered into liquidation under the Securities Investor Protection Act (SIPA). The appellant claimed they were a "customer" for purposes of the Act. The bankruptcy court and district courts denied the appellant customer status in the proceeding. On appeal, the Second Circuit Court affirmed. It reasoned that the Court's precedents require that a customer must have "entrusted" asset to a failed broker-dealer, and the repurchase agreements did not involve any entrustment of assets to Lehman.
Judge(s):
Katzmann, Walker, Chin

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