chapter 11 bankruptcy liquidation successors nomura holdings barclays l3 communications founded 1850 ; 166 years ago 1850 montgomery alabama u.s. 1 founder henry lehman emanuel lehman mayer lehman defunct 2008 headquarters new york city new york united states area served worldwide key people robert lehman pete peterson dick fuld products financial services investment banking investment management number of employees 26 200 2008 subsidiaries lehman brothers inc. neuberger berman inc. aurora loan services llc sib mortgage corporation lehman brothers bank fsb eagle energy partners and the crossroads group website barclays group archives lehman brothers lehman brothers holdings inc. former nyse ticker symbol leh li m n was a global financial services firm . before declaring bankruptcy in 2008 lehman was the fourth largest investment bank in the united states behind goldman sachs morgan stanley and merrill lynch doing business in investment banking equity and fixed income sales and trading especially u.s. treasury securities research investment management private equity and private banking . lehman was operational for 158 years from its founding in 1850 until 2008 . 2 on september 15 2008 the firm filed for chapter 11 bankruptcy protection following the massive exodus of most of its clients drastic losses in its stock and devaluation of assets by credit rating agencies largely sparked by lehman s involvement in the subprime mortgage crisis and subsequent allegations of negligence and malfeasance . 3 4 lehman s bankruptcy filing is the largest in us history 5 and is thought to have played a major role in the unfolding of the late 2000s global financial crisis . the following day barclays announced its agreement to purchase subject to regulatory approval lehman s north american investment banking and trading divisions along with its new york headquarters building . 6 7 on september 20 2008 a revised version of that agreement was approved by u.s. bankruptcy judge james m. peck . 8 the next week nomura holdings announced that it would acquire lehman brothers franchise in the asia pacific region including japan hong kong and australia 9 as well as lehman brothers investment banking and equities businesses in europe and the middle east . the deal became effective on october 13 2008 . 10 contents 1 history 1.1 under the lehman family 1850 1969 1.2 an evolving partnership 1969 1984 1.3 merger with american express 1984 1994 1.4 divestment and independence 1994 2008 1.5 response to september 11 2001 attacks 1.6 june 2003 sec litigation 2 collapse 2.1 causes 2.1.1 malfeasance 2.1.2 subprime mortgage crisis 2.1.3 short selling allegations 2.2 bankruptcy 2.3 liquidation 2.3.1 barclays acquisition 2.3.2 nomura acquisition 2.3.3 sale of asset management businesses 2.4 financial fallout 2.5 ongoing litigation 3 merger and acquisition history 4 board of directors 5 former officers 6 in popular culture 7 principal locations first year of occupancy 8 see also 9 references 10 further reading 11 external links history edit under the lehman family 1850 1969 edit see also lehman family emanuel and mayer lehman in 1844 23 year old henry lehman 11 the son of a jewish cattle merchant emigrated to the united states from rimpar bavaria . 12 he settled in montgomery alabama 11 where he opened a dry goods store h. lehman . 13 in 1847 following the arrival of his brother emanuel lehman the firm became h. lehman and bro . 14 with the arrival of their youngest brother mayer lehman in 1850 the firm changed its name again and lehman brothers was founded . 13 15 during the 1850s cotton was one of the most important crops in the united states . capitalizing on cotton s high market value the three brothers began to routinely accept raw cotton from customers as payment for merchandise eventually beginning a second business trading in cotton . within a few years this business grew to become the most significant part of their operation . following henry s death from yellow fever in 1855 13 16 the remaining brothers continued to focus on their commodities trading brokerage operations . by 1858 the center of cotton trading had shifted from the south to new york city where factors and commission houses were based . lehman opened its first branch office at 119 liberty street 16 and 32 year old emanuel relocated there to run the office . 13 in 1862 facing difficulties as a result of the civil war the firm teamed up with a cotton merchant named john durr to form lehman durr & co. 17 18 following the war the company helped finance alabama s reconstruction . the firm s headquarters were eventually moved to new york city where it helped found the new york cotton exchange in 1870 ; 16 19 emanuel sat on the board of governors until 1884 . the firm also dealt in the emerging market for railroad bonds and entered the financial advisory business . herbert h. lehman official u.s. senate photo lehman became a member of the coffee exchange as early as 1883 and finally the new york stock exchange in 1887 . 16 19 in 1899 it underwrote its first public offering the preferred and common stock of the international steam pump company . 20 despite the offering of international steam the firm s real shift from being a commodities house to a house of issue did not begin until 1906 . in that year under emanuel s son philip lehman the firm partnered with goldman sachs & co. 21 22 to bring the general cigar co. to market 23 followed closely by sears roebuck and company . 23 during the following two decades almost one hundred new issues were underwritten by lehman many times in conjunction with goldman sachs . among these were f.w. woolworth company 23 24 may department stores company gimbel brothers inc. 25 r.h. macy & company 25 the studebaker corporation 24 the b.f. goodrich co. and endicott johnson corporation . following philip lehman s retirement in 1925 his son robert bobbie lehman took over as head of the firm . during bobbie s tenure the company weathered the capital crisis of the great depression by focusing on venture capital while the equities market recovered . traditionally a family only partnership in 1924 john m. hancock became the first non family member to join the firm 21 26 followed by monroe c. gutman and paul mazur in 1927 . by 1928 the firm moved to its now famous one william street location . pete peterson in the 1930s lehman underwrote the initial public offering of the first television manufacturer dumont and helped fund the radio corporation of america rca . 27 it also helped finance the rapidly growing oil industry including the companies halliburton and kerr mcgee . in the 1950s lehman underwrote the ipo of digital equipment corporation . later it arranged the acquisition of digital by compaq . an evolving partnership 1969 1984 edit this section needs additional citations for verification . please help improve this article by adding citations to reliable sources . unsourced material may be challenged and removed . march 2016 learn how and when to remove this template message robert lehman died in 1969 after 44 years as the patriarch of the firm leaving no member of the lehman family actively involved with the partnership . 28 robert s death coupled with a lack of a clear successor from within the lehman family left a void in the company . at the same time lehman was facing strong headwinds amidst the difficult economic environment of the early 1970s . by 1972 the firm was facing hard times and in 1973 pete peterson chairman and chief executive officer of the bell & howell corporation was brought in to save the firm . 28 under peterson s leadership as chairman and ceo the firm acquired abraham & co. in 1975 and two years later merged with the venerable but struggling kuhn loeb & co. 28 to form lehman brothers kuhn loeb inc. the country s fourth largest investment bank behind salomon brothers goldman sachs and first boston . 29 peterson led the firm from significant operating losses to five consecutive years of record profits with a return on equity among the highest in the investment banking industry . by the early 1980s hostilities between the firm s investment bankers and traders who were driving most of the firm s profits prompted peterson to promote lewis glucksman the firm s president coo and former trader to be his co ceo in may 1983 . glucksman introduced a number of changes that had the effect of increasing tensions which when coupled with glucksman s management style and a downturn in the markets resulted in a power struggle that ousted peterson and left glucksman as the sole ceo . 30 upset bankers who had soured over the power struggle left the company . stephen a. schwarzman chairman of the firm s m & a committee recalled in a february 2003 interview with private equity international that lehman brothers had an extremely competitive internal environment which ultimately became dysfunctional . the company suffered under the disintegration and glucksman was pressured into selling the firm . merger with american express 1984 1994 edit shearson lehman american express logo main article shearson lehman hutton shearson american express an american express owned securities company focused on brokerage rather than investment banking acquired lehman in 1984 for 360 million . on may 11 the combined firms became shearson lehman american express . 30 in 1988 shearson lehman american express and e.f. hutton & co. merged as shearson lehman hutton inc. 31 from 1983 to 1990 peter a. cohen was ceo and chairman of shearson lehman brothers 32 where he led the one billion dollar purchase of e.f. hutton to form shearson lehman hutton . 33 during this period shearson lehman was aggressive in building its leveraged finance business in the model of rival drexel burnham lambert . in 1989 shearson backed f. ross johnson s management team in its attempted management buyout of rjr nabisco but were ultimately outbid by private equity firm kohlberg kravis roberts who was backed by drexel . divestment and independence 1994 2008 edit in 1993 under newly appointed ceo harvey golub american express began to divest itself of its banking and brokerage operations . it sold its retail brokerage and asset management operations to primerica 34 and in 1994 it spun off lehman brothers kuhn loeb in an initial public offering as lehman brothers holdings inc. 35 despite rumors that it would be acquired again lehman performed quite well under chairman and ceo richard s. fuld jr. . by 2008 fuld had been with the company for 30 years and would be the longest tenured ceo on wall street . fuld had steered lehman through the 1997 asian financial crisis a period where the firm s share price dropped to 22 usd in 1998 but he was said to have underestimated the downturn in the us housing market and its effect on lehman s mortgage bond underwriting business . fuld kept his job as the subprime mortgage crisis took hold while ceos of rivals like bear stearns merrill lynch and citigroup were forced to resign . 36 in addition lehman s board of directors which included retired ceos like vodafone s christopher gent and ibm s john akers were reluctant to challenge fuld as the firm s share price spiraled lower . 36 fuld had a succession of number twos under him usually titled as president and chief operating officer . chris pettit was fuld s second in command for two decades until november 26 1996 when he resigned as president and board member . pettit lost a power struggle with his deputies steve lessing tom tucker and joseph m. gregory back on march 15 that year that caused him to relinquish its coo title likely brought about after the three men found out about pettit s extramarital affairs which violated fuld s unwritten rules on marriage