Picture the scene: you’re a multi-billion-dollar long-short equity hedge fund that posts cash and securities to a major prime broker for financing and derivatives operations. One day, you wake up to discover the prime broker has defaulted, impounding millions of dollars of your assets and cash. Most participants would have found this scenario ludicrously implausible just two years ago. It no longer seems so far-fetched.
“The insolvency of Lehman Brothers International (Europe) (LBIE) was
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