16 September 2008 — DFSA’s Statement on Lehman Brothers in the DIFC
In response to media enquiries, the Dubai Financial Services Authority (“DFSA”) is issuing this statement to clarify the current status of Lehman Brothers operations in the DIFC.
Lehman Brothers International (Europe) (“Lehman”) is an investment bank domiciled in the United Kingdom and supervised by the UK Financial Services Authority (“FSA”). On 28 August 2006 Lehman established a branch operation in the DIFC under license from the DFSA.
On 15 September 2008 Lehman was placed under administration in the United Kingdom. The effect of that action was to place control of Lehman and all its operations, including its Dubai International Financial Centre (“DIFC”) branch operation, under control of the Administrators, Price Waterhouse Coopers. Until and unless the Administrators determine otherwise, Lehman (including the DIFC branch) is precluded from conducting business.
The events leading up to the appointment of Administrators were not connected with Lehman DIFC branch operations. Lehman has not been in breach of DFSA’s requirements. The difficulties encountered by Lehman relates to its operations elsewhere. The closure of Lehman does not result from any action of the DFSA. It is the legal consequence of administration proceedings instituted in the United Kingdom by Lehman itself.
No client money is held by the DIFC branch of Lehman, and any money invested in the Lehman UK funds, are regulated by the UK Financial Services Authority and are required by it to be segregated from assets of Lehman.
As lead regulator of Lehman, the UK FSA is in active dialogue with the Administrators regarding its future. The DFSA is maintaining close contact with the UK FSA, but does not expect any early change to the current situation.