Clifford Chance
Supreme Court decision on Lehman client money opens the door for recovery of unsegregated client assets
5 March 2012
In the final chapter of protracted proceedings arising from the collapse of Lehman Brothers International (Europe) Limited ("LBIE"), the UK Supreme Court, interpreting Chapter 7 of the FSA's Client Assets Sourcebook ("CASS 7"), has ruled on what constitutes client money, and which monies are required to be returned in the event of the failure of a firm. Upholding the decision of the Court of Appeal, the court has held that client money is held on trust immediately upon receipt and that, in the event of a firm's failure, client money held in a firm's own accounts is available for return to clients, even if it has not been segregated.
