With Lehman Brothers filing for Chapter 11 bankruptcy protection, investors are fearful their holdings could be decimated, but regulators have been stepping in to reassure them that their mutual fund and brokerage accounts are safe, The Wall Street Journal reports. The Securities and Exchange Commission said that some of its staff were working within Lehmans offices to ensure customer accounts are protected.
Lehman Brothers customers will benefit from extensive protections under SEC rules, including segregation of customer securities and cash as well as insurance by the Securities Investor Protection Corporation, the SEC said in an announcement.
Certainly, because the firm excluded Neuberger Berman from the bankruptcy filing, that company is protected, analysts said.
And while investment banks have been hard hit by the credit crisis, strong management and the recurring revenue stream from management fees at investment houses are insulating them from the turmoil.
The factors all provide a level of stability with earnings and growth potential going forward, said Michael S. Kim, an analyst with Sandler ONeill & Partners. The Neuberger brand will be able to survive independently, agreed William Katz, an analyst with Buckingham Research. The money managers have good reputations [and] relationships with the clients.
But the firm could hit trouble if portfolio managers decide to leave under different management, warned David Kathman, an analyst with Morningstar.
Meanwhile, Lehman is reportedly still trying to sell its asset management unit in its entirety, which includes an asset management and private equity division at Lehman as well as Neuberger Berman. Earlier, the firm was looking to sell a 55% stake. Reportedly, five companies have bid for thebusiness, including: Kohlberg Kravis Roberts & Co., Hellman & Friedman, Clayton Dubilier & Rice, Bain Capital and CVC Capital Partners.