Assets in Lehman brokerage accounts?

[cstfx]

The funds in question at Refco were funds at the Recfo Capital Markets unit which were not covered by SIPC insurance. SIPC insuance covers cash, bonds and equity accounts to the above mentioned limits. Futures and derivatives accounts are not covered under SIPC rules.

From SIPC website, items not covered:

What SIPC Covers... What it Does Not

The cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm are protected by SIPC.

Among the investments that are ineligible for SIPC protection are commodity futures contracts and currency, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

It is important to recognize that SIPC does not work the same way as the Federal Deposit Insurance Corporation in terms of blanket protection of losses.

http://www.sipc.org/how/covers.cfm

 

[brocklanders]

Quote from cstfx:

The funds in question at Refco were funds at the Recfo Capital Markets unit which were not covered by SIPC insurance.

If I remember correctly, Refco Securities, LLC (SIPC member) was liquidated during the time of the bankruptcy. I don't think any Refco securities customers lost money but I don't know for sure. Maybe someone who had an account with Refco Securities can tell us what their experience was. You are correct that the unregulated Refco Capital Markets was the primary loser in the bankruptcy. I had a Refco account in the futures brokerage and business continued as normal.

 

[cstfx]

Part of the funds were segregated, ala Refco Securities LLC. The Refco Capital Markets division if I remember correctly were non-segregated funds and creditors made claims on them. The fx division, which is where most I guess felt this, were under this division and thus got very little of our assets back.

Also, I think MF bought the book of Refco Securities. That may be why they were not so affected.