Lehman Brother Lawsuit Being Reviewed By Nevada State Government
The state government of Nevada has hired a law firm to investigate whether they may be able to recover a portion of their treasury’s $50 million investment loss caused by the collapse of Lehman Brothers in September 2008.
The state is looking into filing a potential Lehman Brother lawsuit against Metropolitan West , their securities advisor who recommended that they place their money with the investment bank and recommended against pulling the investment even days before Lehman Brothers filed bankruptcy.
According to the Las Vegas Review-Journal, the state has authorized an expenditure of $500,000 in legal fees to pursue the recovery, and it is possible that additional legal expenses may be required to complete the litigation.
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Lehman Brothers was once the fourth largest investment bank in the United States, but filed for bankruptcy on September 15, 2008, leaving investors with essentially worthless investments.
While the Nevada state government may be able to recover a portion of their losses through the bankruptcy court, they also may be able to secure reimbursement for some of their losses directly from their securities investment firm, Metropolitan West, which is a division of Wachovia.
The Nevada state treasurer, Kate Marshall, has indicated that their advisors repeatedly told the state that their Lehman Brothers investment was secure, and recommended against pulling the funds even two days before the bankruptcy filing.
Similar Lehman Brothers investor lawsuits have been filed on behalf of other government entities, including San Mateo County, California, which lost approximately $150 million from their $2.6 billion investment pool.
Individual investors are also pursuing broker arbitration claims and Lehman Brothers class action lawsuits over losses tied to structured notes, which were sold by brokerage firms with guarantees that the principal would be protected. However, because the guarantee was provided by Lehman Brothers, it is now meaningless after the bankruptcy filing.
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