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Emails Show Ex-Deutsche Trader Lippmann Wanted Lehman Derivatives

blogs.wsj.comApr 1, 2013

By Patrick Fitzgerald

Former Deutsche Bank star DBK.XE +3.30% trader Greg Lippmann considered taking on some of Lehman Brothers’ derivatives positions in the days following the investment bank’s September 2008 collapse, a deal that could have been worth more than $500 million to the investment bank’s creditors, according to newly released emails.

Lippmann, who made more than $1 billion for the German bank when he bet against subprime mortgage debt during the housing bubble, wanted to “step into” the in-the-money credit default swaps of Lehman Brothers Specialty Finance, the heart of Lehman’s derivatives operations.

The trader, known on Wall Street for handing out T-shirts emblazoned with “I’m Short Your House” in 2006 at the height of the bubble, was keen to strike a deal.

“I do think this is a value for Lehman’s creditors (and for me) that could suddenly evaporate,” said Mr. Lippmann in a Sept. 29, 2008, email to a Lehman executive, two weeks after Lehman’s holding company filed for Chapter 11.

Lippmann, who left Deutsche Bank in 2010 when he co-founded the hedge fund LibreMax, wasn’t the only one interested in Lehman. In a Sept. 18 email exchange between various Lehman executives Morgan Stanley also MS +0.18% expressed interest in stepping into Lehman’s positions.

The emails, which were filed as part of lawsuit involving Lehman and Barclays PLC BARC.LN +2.18%over a failed collateralized debt obligation called Ballyrock, bring into focus how some on Wall Street looked to capitalize from Lehman’s collapse as the bankruptcy filing and the subsequent bailout of American International Group AIG +2.01% was roiling financial markets. You can read them here and here.

Representatives for Lehman, Deutsche Bank and Lippmann declined to comment. A Morgan Stanley spokesman couldn’t immediately comment.

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