Security financial collateral transfers and prime broker insolvency

This article deals with the consequences of a prime broker's insolvency in the case of a security financial collateral arrangement. In Re Lehman Brothers International (Europe), Briggs J had to deal with the proprietary rights of a custody client in respect of securities initially transferred to a prime broker and securities substituted for those original securities by the prime broker. In addition, issues arose as to the prime broker's beneficial ownership of cash generated by securities after the prime brokerwent into administration and as to whether a duty on the part of administrators to account to the custody client for that cash was an expense of the administration.