The Joint Administrators of Lehman Brothers International (Europe) (In Administration) v (1) Lehman Brothers Finance SA: (2) Lehman Brothers Commercial Corporation Asia Limited: (3) Lehman Brothers Asia Holdings Limited: (4) Lehman Brothers Inc.: (5) Lehman Brothers Special Financing Inc.
In the latest chapter in the administration of Lehman Brothers, Briggs J today handed down judgment in the proceedings known as “RASCALS”.
RASCALS is a dispute between the principal London based Lehman entity (“LBIE”) and various Lehman affiliates worldwide, as to the ownership of securities which were subject to Lehman inter-company repurchase agreements and stock loans (known as the “RASCALS” process).
The court decided that: (i) after initial acquisition of the securities from the street they were beneficially owned by the affiliates, and not by LBIE; (ii) however, the effect of the RASCALS process was to transfer the beneficial title in the securities to LBIE; and (iii) therefore, upon the collapse of the group, the securities that had been made subject to RASCALS were beneficially vested in LBIE, and not the affiliates.
In deciding whether, after the initial acquisition, securities held in LBIE’s unsegregated house depots were held on trust for the affiliates, Briggs J reviewed the law on certainty of trusts, ultimately applying the much debated decision of the Court of Appeal in Hunter v. Moss  1 WLR 452.