Unraveling Lehman's tangled web

Thu Oct 30, 2008



After the broker/dealer’s bankruptcy, fund managers are learning about counterparty risk – the hard way.


After the broker/dealer's bankruptcy, fund managers are learning about counterparty risk - the hard way

By Carolyn Sargent

With strong returns and a ballooning asset base, Amber Capital Investment Management had great plans for the future. Its sleek, high-design offices on the 57th floor of the 59-story Citigroup Center offer sweeping views of Manhattan and - as a long hallway of empty offices attests - plenty of room for more staff.

But in a few short weeks, Amber's world has turned upside down. The firm, which at its peak last year managed $7.2 billion, lost money earlier this year and was in the midst of restructuring when Lehman Brothers, its prime broker, declared bankruptcy. Between $300 million and $500 million is now caught up in Amber's London prime brokerage account - a serious chunk of the roughly $2.1 billion the firm now manages.

Amber thought it was protected, having taken the...

TAKE A FREE TRIAL

The full contents of this article are available to active AR subscribers and trialists only.

To continue reading please,
take a free trialsubscribe or log in to AR.

Subscribe

Subscribers have unlimited access to all current and archive content. Start your subscription today - click on the button below.

Subscribe now