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Questions & Answers

 


What is the Customer Asset Protection Company ("CAPCO")?

Who is protected?

Who is a “Customer” under the CAPCO Excess SIPC Surety Bond?

Are any Customers excluded from coverage under the Excess SIPC Surety Bond?

Can a change in SIPA impact coverage under the CAPCO Excess SIPC Surety Bond?

Does the Bond cover institutional customers?

Are any account assets excluded from Excess SIPC protection?

If a customer’s assets are not of a type protected by SIPA, does the Customer have any Excess SIPC account protection?


 


All Bonds issued by CAPCO expired in or prior to February 2009.

Only customers of Lehman Brothers Inc. and Lehman Brothers International (Europe) may be beneficiaries under the Bonds because insolvency proceedings were commenced prior to expiration of the Bonds with regard to only those firms. Coverage provided by the Bonds is described in more detail in this web site.


Q. What is the Customer Asset Protection Company ("CAPCO")?

CAPCO is an insurance company licensed by the state of Vermont. CAPCO providesprotection only for institutional and individual clients' securities accounts of Lehman Brothers Inc. and Lehman Brothers International (Europe). This Excess SIPC protection is excess of the protection provided by the Securities Investor Protection Act ("SIPA"), which is administered by the Securities Investor Protection Corporation ("SIPC").


Q. Who is protected?

The securities broker/dealer referred to as the "Firm" in the CAPCO Excess SIPC Surety Bond issued to that Firm (the "Bond") may also be referred to as "Insured" under Bond. But it is the "Customers" of the Firm (as "Customer" is defined in the Bond), rather than the Firm itself, who are the beneficiaries of CAPCO's payment obligations under the Bond. Because insolvency proceeding were commenced prior to expiration of the Bonds with regard only to Lehman Brothers Inc.and Lehman Brothers International (Europe), only Customers of those Firms may be beneficiaries under the Bonds. The coverage of the Bond is described in more detail in the answers below.


Q. Who is a “Customer” under the CAPCO Excess SIPC Surety Bond?

Because insolvency proceeding were commenced prior to expiration of the Bonds with regard only to Lehman Brothers Inc.and Lehman Brothers International (Europe), only Customers of those Firms may be beneficiaries under the Bonds. See www.sipc.org for more information. Under the Bond, a Customer is a client of the Firm who satisfies the definition of "Customer" set forth in section 78lll(2) of the SIPA.


Q. Are any Customers excluded from coverage under the Excess SIPC Surety Bond?

No, all Customers of Lehman Brothers Inc. and Lehman Brothers International (Europe) are eligible for coverage under the Bond, subject to its terms. However, the protection does not apply to all losses. For example, it does not apply to any loss that arises directly or indirectly through fraudulent, dishonest, or wrongful acts on the part of the Customer, or through any such act in which the Customer is implicated.

Q. Can a change in SIPA impact coverage under the CAPCO Excess SIPC Surety Bond?

Yes. Material changes to SIPA, however, are subject to congressional approval. If any provision of SIPA is altered so as to affect the protection afforded by the Bond, CAPCO has the option of accepting the alterations, renegotiating the Bond with the Firm, or canceling the Bond upon 90 days notice to the Firm. See www.sipc.org for information regarding SIPA.

 

Q. Does the Bond cover institutional customers?

Yes, subject to the terms and conditions generally applicable to Customers.

 

Q. Are any account assets excluded from Excess SIPC protection?

Certain types of assets that are not protected under SIPA, are also not covered by Excess SIPC protection. Among the investments that are ineligible for SIPA protection are commodity futures contracts, currency, and precious metals, 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.

 

Q. If a Customer's assets are not of a type protected by SIPA, does the Customer have any Excess SIPC account protection?

No. The Customer's assets must first be protected by SIPA in order to be eligible for Excess SIPC protection.


Q. Is there a deadline for filing claims?

Claims under the Bond may be submitted as late as six months after the underliying SIPC proceeding is closed.

 
 
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