Sept. 28 (Bloomberg) -- Lehman Brothers Holdings Inc. executives including former Chairman Richard Fuld settled an investor lawsuit brought by six California municipalities using $1.05 million from the defunct firm’s insurers.
The cities blamed the officers and directors for losses tied to $35 million in Lehman securities they bought in 2007 and 2008. Some of the securities were purchased within two weeks of Lehman’s Sept. 15, 2008, bankruptcy filing, according to a filing yesterday in U.S. Bankruptcy Court in Manhattan.
Fuld, 65, was chief executive officer of New York-based Lehman, once the fourth-largest U.S. investment bank, before its bankruptcy. Fuld and the other executives didn’t admit any wrongdoing under the settlement.
A bankruptcy examiner said New York-based Lehman foundered because of too much debt, which it tried to hide from investors, and risky real-estate investments.
Patricia Hynes, a lawyer for Fuld, didn’t immediately return a call for comment on the settlement.
Lehman yesterday asked a judge to lift the so-called automatic stay imposed by its bankruptcy filing to allow the settlement to be paid. The court has lifted the stay on 10 previous occasions to allow Lehman to use its directors-and- officers insurance, according to the filing.
The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--Editors: Stephen Farr, Michael Hytha
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