Lehman Europe files lawsuit tied to derivative transaction termination

By Caroline Salls

Pittsburgh, Nov. 29 - Lehman Brothers International (Europe) (LBIE) is suing Assured Guaranty Ltd. subsidiary AG Financial Products Inc., alleging that AG improperly terminated nine credit derivative transactions and improperly calculated the termination payment on 28 other transactions, according to an 8-K filed with the Securities and Exchange Commission by Assured Guaranty.

The lawsuit was filed on Monday in the Supreme Court of the State of New York.

According to the 8-K, AG Financial calculated that LBIE owes it $24.8 million in termination payments for 28 credit derivative transactions, while LBIE claims AG owes it a $1.4 billion termination payment.

LBIE is seeking unspecified damages.

Assured said AG Financial Products believes that, following defaults by LBIE, the transactions in question were properly terminated in 2008 and 2009 and that the termination payment was calculated properly.

New York-based Lehman Brothers Holdings was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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