Lehman Brothers prime brokerage customers left high and dry

We may be witnessing a historic shift in the prime brokerage industry. Morgan Stanley's prime brokerage operation has certainly been hit hard. The bank reportedly lost more than one-third of its assets in one week, back when it was perceived--rightly or not--to be on the ropes. Lehman Brothers' prime brokerage operation is now back in the news. Bloomberg reports that some hedge fund clients have had extreme difficulty in getting their funds out. One hedge fund, Oak Group, tells the news service that it will probably have to shutter operations because funds are tied up. One has to wonder how Goldman Sachs' prime brokerage operations are holding up. One also has to wonder if the business model of the big boys, built on leverage, will have to be adjusted. If so, how? It's fair to say that prime brokerage, a bright spot just a few quarters ago, may not be the earnings driver some had hoped.

For more:
- here's the Bloomberg article

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