Editing Lehman Brothers (section)

== History ==

=== Under the Lehman family (1850–1969) ===
{{See also|Lehman family}}
[[File:Lehman Brothers.jpg|thumb|right| Emanuel and Mayer Lehman]]
In 1844, 23-year-old Hayum Lehmann, who changed his name to [[Henry Lehman]],<ref name=Geisst49>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 49</ref> the son of a Jewish cattle merchant, emigrated to the United States from [[Rimpar]], [[Kingdom of Bavaria|Bavaria]].<ref name=Bernhard1>Bernhard, William, L., Birge, June Rossbach Bingham, Loeb, John L., Jr..  '' Lots of Lehmans – The Family of Mayer Lehman of Lehman Brothers, Remembered by His Descendants''. [[Center For Jewish History]], 2007, page 1</ref> He settled in [[Montgomery, Alabama]],<ref name="Geisst49" /> where he opened a [[dry-goods]] store, "H. Lehman".<ref name=Wechsberg233>Wechsberg, Joseph.  ''The Merchant Bankers''. Pocket Books, 1966, page 233</ref> In 1847, following the arrival of his brother [[Emanuel Lehman]], the firm became "H. Lehman and Bro."<ref name=Bernhard5>Bernhard, William, L., Birge, June Rossbach Bingham, Loeb, John L., Jr..  '' Lots of Lehmans – The Family of Mayer Lehman of Lehman Brothers, Remembered by His Descendants''. Center For Jewish History, 2007, page 5</ref> With the arrival of their youngest brother, [[Mayer Lehman]], in 1850, the firm changed its name again and "Lehman Brothers" was founded.<ref name="Wechsberg233" /><ref name=Birmingham47>Birmingham, Stephen.  ''[[Our Crowd: The Great Jewish Families of New York]]''. Harper and Row, 1967, page 47</ref>

During the 1850s, cotton was one of the most important crops in the United States, and was Alabama's highest-grossing cash crop. Until the U.S. Civil War, nearly all U.S. cotton was produced by [[Slavery in the United States|slave labor]], and by the 1860 census, slaves constituted nearly 45% of Alabama's total population.<ref>{{Cite web|last=Churchwell|first=Sarah|date=June 11, 2019|title='The Lehman Trilogy' and Wall Street's Debt to Slavery|url=https://www.nybooks.com/daily/2019/06/11/the-lehman-trilogy-and-wall-streets-debt-to-slavery/|access-date=September 30, 2020|website=The New York Review of Books|language=en}}</ref> Mayer Lehman was listed as the owner of seven slaves ("three males and four females ranging in age from 5 to 50") in the [[U.S. Census of 1860]].<ref>{{Cite news |date=2022-02-21 |title=Lehman Bros: 1 brother owned 7 slaves in 1860 |work=USA Today |url=https://usatoday30.usatoday.com/money/general/2002/02/21/slave-lehman-bros.htm |url-status=dead |archive-url=https://web.archive.org/web/20220523141326/https://usatoday30.usatoday.com/money/general/2002/02/21/slave-lehman-bros.htm |archive-date=2022-05-23}}</ref>

Capitalizing on cotton's high market value, the three brothers began to routinely accept raw cotton from slave plantations [[bartering|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,<ref name="Wechsberg233" /><ref name=Geisst50>Geisst, Charles R. ''The Last Partnerships''. [[McGraw-Hill]], 1997, page 50</ref> the remaining brothers continued to focus on their commodities-trading/brokerage operations.

By 1858, the center of cotton trading had shifted from the [[Southern United States|South]] to New York City, where [[Cotton factor|factors]] and commission houses were based. Lehman opened its first branch office at 119 [[Liberty Street (Manhattan)|Liberty Street]],<ref name="Geisst50" /><ref name=":3">{{Cite web|last=Phillips|first=McCandlish|date=August 10, 1969|title=ROBERT LEHMAN, FINANCIER, DEAD; Robert Lehman, Art Collector and Investment Banker, Dies|url=http://timesmachine.nytimes.com/timesmachine/1969/08/10/89015998.html?pdf_redirect=true&site=false|access-date=September 30, 2020|website=The New York Times|language=en}}</ref> and 32-year-old Emanuel relocated there to run the office.<ref name="Wechsberg233" /> In 1862, facing difficulties as a result of the [[American Civil War|Civil War]], the firm teamed up with a cotton merchant named John Durr to form Lehman, Durr & Co.<ref name=Birmingham77>Birmingham, Stephen.  ''[[Our Crowd: The Great Jewish Families of New York]]''. Harper and Row, 1967, page 77</ref><ref name=Bernhard8>Bernhard, William, L., Birge, June Rossbach Bingham, Loeb, John L., Jr..  '' Lots of Lehmans – The Family of Mayer Lehman of Lehman Brothers, Remembered by His Descendants''. Center For Jewish History, 2007, page 8</ref> Following the war the company helped finance [[History of Alabama#Reconstruction, 1865-1875|Alabama's reconstruction]]. The firm's headquarters was eventually moved to New York City, where it helped found the [[New York Cotton Exchange]] in 1870, commodifying the crop;<ref name="Geisst50" /><ref name=Wechsberg235>Wechsberg, Joseph.  ''The Merchant Bankers''. Pocket Books, 1966, page 235</ref> 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.<ref name=":1">{{Cite web|last=Brownfiield|first=Troy|date=January 15, 2019|title=The Company that Nearly Bankrupted America {{!}} The Saturday Evening Post|url=https://www.saturdayeveningpost.com/2019/01/lehman-brothers-the-company-that-nearly-bankrupted-america/|access-date=September 30, 2020|website=The Saturday Evening Post}}</ref>

Lehman became a member of the [[Coffee Exchange]] as early as 1883 and finally the [[New York Stock Exchange]] in 1887.<ref name="Geisst50" /><ref name="Wechsberg235" /> In 1899, it [[underwriting|underwrote]] its first public offering, the preferred and common stock of the [[International Steam Pump Company]].<ref>{{cite book |last=Swaine |first=Robert T. |date=1946 |title=The Cravath Firm and Its Predecessors, 1819–1947 |url=https://books.google.com/books?id=p8jmmSwD9KEC&pg=RA1-PA196 |publisher=The Lawbook Exchange, Ltd. |page=633 |isbn=978-1-58477-713-7 |access-date=June 3, 2014}}</ref>

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.<ref name=":3" /><ref name=":2">{{Cite news|last=Auletta|first=Ken|date=February 17, 1985|title=Power, Greed and Glory on Wall Street: The Fall of the Lehman Brothers|language=en-US|work=The New York Times|url=https://www.nytimes.com/1985/02/17/magazine/power-greed-and-glory-on-wall-street-the-fall-of-the-lehman-brothers.html|access-date=September 30, 2020|issn=0362-4331}}</ref> In that year, under Emanuel's son [[Philip Lehman]], the firm partnered with [[Goldman, Sachs & Co.]],<ref name=":2" /><ref name=Geisst51>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 51</ref><ref name=Geisst285>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 285</ref> to bring the General Cigar Co. to market,<ref name=Wechsberg238>Wechsberg, Joseph.  ''The Merchant Bankers''. Pocket Books, 1966, page 238</ref> followed closely by [[Sears, Roebuck and Company]].<ref name="Wechsberg238" /> Among these were [[F.W. Woolworth Company]],<ref name="Wechsberg238" /><ref name=Geisst53>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 53</ref> [[May Department Stores Company]], [[Gimbel's|Gimbel Brothers, Inc.]],<ref name=Wechsberg241>Wechsberg, Joseph.  ''The Merchant Bankers''. Pocket Books, 1966, page 241</ref> [[R.H. Macy & Company]],<ref name="Wechsberg241" /> [[The Studebaker Corporation]],<ref name="Geisst53" /> the [[Goodrich Corporation|B.F. Goodrich Co.]],<ref name=":1" /> and [[Endicott Johnson Corporation]].

Following Philip Lehman's retirement in 1925, his son [[Robert Lehman|Robert "Bobbie" Lehman]] took over as head of the firm.<ref name=":3" /><ref>{{Cite web|last=Kapur|first=Saranya|date=November 7, 2013|title=A Lehman Brothers Founder's Historic Mansion Just Sold As 'Trophy Office Space' For $40 Million|url=https://www.businessinsider.in/a-lehman-brothers-founders-historic-mansion-just-sold-as-trophy-office-space-for-40-million/articleshow/25392157.cms|access-date=September 30, 2020|website=Business Insider}}</ref><ref>{{Cite web|last=Serwer|first=Andy|date=April 11, 2006|title=CEO Dick Fuld's makeover of Lehman Brothers – Apr. 11, 2006|url=https://money.cnn.com/2006/04/10/news/companies/lehmanintro_f500_fortune_041706/|access-date=September 30, 2020|website=CNN Money}}</ref> During Bobbie's tenure, the company weathered the capital crisis of the [[Great Depression]] by focusing on [[venture capital]] while the [[equities]] market recovered.<ref>{{Cite web|date=September 7, 2009|title=Crash of a titan: The inside story of the fall of Lehman Brothers|url=http://www.independent.co.uk/news/business/analysis-and-features/crash-of-a-titan-the-inside-story-of-the-fall-of-lehman-brothers-1782714.html|access-date=September 30, 2020|website=The Independent|language=en}}</ref>

In 1924, John M. Hancock became the first non-family member to join the firm,<ref name="Geisst51" /><ref name=UND1>{{cite web |url=http://www.und.nodak.edu/dept/library/Collections/og55.html |publisher=University of North Dakota |title=John M. Hancock Papers |access-date=September 14, 2008 |archive-url=https://web.archive.org/web/20070210020012/http://www.und.nodak.edu/dept/library/Collections/og55.html |archive-date=February 10, 2007}}</ref> followed by Monroe C. Gutman and Paul Mazur, who became partners in 1927.<ref>{{Cite news|date=July 5, 1974|title=Monroe Gutman, 88, Lehman Executive|language=en-US|work=The New York Times|url=https://www.nytimes.com/1974/07/05/archives/monroe-gutman-88-lehman-executive.html|access-date=September 30, 2020|issn=0362-4331}}</ref><ref>{{Cite news|last=Waggoner|first=Walter H.|date=August 1, 1979|title=Paul M. Mazur, at 86; Lehman Bros. Partner More Than 50 Years|language=en-US|work=The New York Times|url=https://www.nytimes.com/1979/08/01/archives/paul-m-mazur-at-86-lehman-bros-partner-more-than-50-years.html|access-date=September 30, 2020|issn=0362-4331}}</ref> By 1928, the firm had moved to its [[One William Street]] location.<ref>{{Cite book|last=Chapman|first=Peter|url=https://books.google.com/books?id=6Etda_n_CIEC&pg=PT94|title=The Last of the Imperious Rich: Lehman Brothers, 1844–2008|date=September 2, 2010|publisher=Penguin|isbn=978-1-101-44270-8|pages=94|language=en}}</ref>

[[Image:PeterGeorgePeterson.jpg|thumb|150px|right|[[Peter G. Peterson|Pete Peterson]]]]
In the 1930s, Lehman underwrote the [[initial public offering]] of the first [[list of television manufacturers|television manufacturer]], [[DuMont Laboratories]], and helped fund the [[Radio Corporation of America]] (RCA).<ref name="ingrham">{{cite book |last=Ingham |first=John N. |url=https://books.google.com/books?id=J9nXHgKQ49EC&q=lehman+brothers+rca&pg=PA786 |title=Biographical Dictionary of American Business Leaders |publisher=[[Greenwood Publishing Group]] |year=1983 |access-date=September 14, 2008 |isbn=9780313213625}}</ref> 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]].<ref>{{Cite news|date=September 13, 2008|title=FACTBOX: A brief history of Lehman Brothers|language=en|work=Reuters|url=https://www.reuters.com/article/us-lehman-factbox-idUSHAR27520620080913|access-date=September 30, 2020}}</ref> Later, it arranged the acquisition of Digital by [[Compaq]].

=== An evolving partnership (1969–1984) ===
[[Robert Lehman]] died in 1969 after 44 years in a leadership position for the firm, leaving no member of the Lehman family actively involved with the partnership.<ref name=":3" /> 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, [[Peter G. Peterson|Pete Peterson]], chairman and chief executive officer of the [[Bell & Howell]] Corporation, was brought in to save the firm.<ref name=":0">{{Cite book|last=Ward|first=Vicky|url=https://books.google.com/books?id=Y9jIDwAAQBAJ&q=lehman+brothers+1970s|title=The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers|date=April 5, 2011|publisher=John Wiley & Sons|isbn=978-1-118-01149-2|language=en}}</ref><ref name="Geisst77">Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 77 {{dead link|date=March 2016}}</ref>

Under Peterson's leadership as chairman and CEO, the firm acquired Abraham & Co. in 1975, and two years later merged with [[Kuhn, Loeb & Co.]],<ref name=Geisst77/> to form [[Lehman Brothers, Kuhn, Loeb Inc.]], the country's fourth-largest investment bank, behind [[Salomon Brothers]], [[Goldman Sachs]] and [[First Boston]].<ref name="sloane">{{cite news |url=https://select.nytimes.com/mem/archive/pdf?res=F60814F93F5B117B93CBAB178AD95F438785F9 |title=Lehman and Kuhn Loeb to Merge; Lehman Brothers and Kuhn Loeb Sign Agreement to Merge December 16 |first=Leonard |last=Sloane |date=November 29, 1977 |work=[[The New York Times]]}}</ref> 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.<ref name=":0" /><ref>{{Cite book|last1=Ph.D|first1=William F. BAKER|url=https://books.google.com/books?id=d66J6gnavS4C&q=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&pg=PA222|title=Leading with Kindness: How Good People Consistently Get Superior Results|last2=Ph.D|first2=Michael O'MALLEY|date=August 13, 2008|publisher=AMACOM|isbn=978-0-8144-0175-0|language=en}}</ref>

By the early 1980s, hostilities between the firm's [[investment banker]]s and [[trader (finance)|traders]] prompted Peterson to promote [[Lewis Glucksman]], the firm's President, COO and former trader, to be his co-CEO in May 1983.<ref name=":2"/> 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.<ref name=":0" /><ref name=Geisst78>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 78</ref>

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.<ref name=":0" /><ref>{{Cite web|last=Staff|first=P. E. I.|title=Always bet on black|url=https://www.privateequityinternational.com/print-editions/2003-02/always-bet-on-black/|access-date=June 22, 2020|website=Private Equity International|date=February 2003 |language=en-GB}}</ref>

=== Merger with American Express (1984–1994) ===
[[Image:Shearson Lehman Logo.png|thumb|right|[[Shearson Lehman/American Express]] logo]]
{{Main|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&nbsp;million.<ref>{{Cite news|last=Cole|first=Robert J.|date=April 11, 1984|title=Shearson to Pay $360 Million to Acquire Lehman Brothers|language=en-US|work=The New York Times|url=https://www.nytimes.com/1984/04/11/business/shearson-to-pay-360-million-to-acquire-lehman-brothers.html|access-date=September 30, 2020|issn=0362-4331}}</ref> On May 11, the combined firms became Shearson Lehman/American Express.<ref name="Geisst78" />

From 1983 to 1990, [[Peter A. Cohen]] was CEO and chairman of Shearson Lehman Brothers,<ref name="forbes">{{cite news |url=https://people.forbes.com/profile/peter-a-cohen/48145 |title=Profile: Peter A. Cohen |work=[[Forbes]] |access-date=February 15, 2012 |archive-url=https://web.archive.org/web/20120204151114/http://people.forbes.com/profile/peter-a-cohen/48145 |archive-date=February 4, 2012 |url-status=dead  }}</ref> where he led the $1 billion purchase of [[E.F. Hutton]] to form [[Shearson Lehman Hutton]].<ref name="cole">{{cite news |url=https://query.nytimes.com/gst/fullpage.html?res=9B0DE5DC1239F937A35751C1A961948260&scp=77&sq=shearson+lehman+hutton&st=nyt |title=Company News – Hutton-Shearson Deal Announced |work=The New York Times |date=December 4, 1987 |first=Robert J. |last=Cole}}</ref><ref>{{cite web|url=http://pro.corbis.com/search/Enlargement.aspx?CID=isg&mediauid=%7B56850BCA-B9AB-46D6-931A-D184A7C0A95A%7D |archive-url=https://archive.today/20120720030028/http://pro.corbis.com/search/Enlargement.aspx?CID=isg&mediauid=%7B56850BCA-B9AB-46D6-931A-D184A7C0A95A%7D |url-status=dead |archive-date=July 20, 2012 |title=Shearson Lehman Buying out E.F. Hutton – Rights Managed |publisher=Pro.corbis.com |access-date=October 16, 2010 }}</ref> 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 Burnham Lambert]].<ref>{{Cite news|date=December 2, 1988|title=History of the Rjr Nabisco Takeover|language=en-US|work=The New York Times|url=https://www.nytimes.com/1988/12/02/business/history-of-the-rjr-nabisco-takeover.html|access-date=September 30, 2020|issn=0362-4331}}</ref>

=== Divestment and independence (1994–2008) ===
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]]<ref name="quint">{{cite news |url=https://query.nytimes.com/gst/fullpage.html?res=9F0CE0D8143AF930A25750C0A965958260&scp=14&sq=american+express+shearson&st=nyt |title=Primerica Will Buy Shearson for $1&nbsp;billion |work=The New York Times |date=March 13, 1993 |first=Michael |last=Quint}}</ref> and in 1994 it spun off Lehman Brothers Kuhn Loeb in an [[initial public offering]], as Lehman Brothers Holdings, Inc.<ref name=Geisst79>Geisst, Charles R. ''The Last Partnerships''. McGraw-Hill, 1997, page 79</ref> After being spun off, [[Dick Fuld]] became CEO of the company.<ref>{{Cite news|last=Anderson|first=Jenny|date=October 28, 2007|title=The Survivor|language=en-US|work=The New York Times|url=https://www.nytimes.com/2007/10/28/business/28fuld.html|access-date=September 30, 2020|issn=0362-4331}}</ref> He led one of the United States and the world's [[bulge-bracket]] investment banks.<ref name="junod20090911">{{Cite magazine |last=Junod |first=Tom |date=2009-09-11 |title=The Deal of the Century |url=https://www.esquire.com/news-politics/a6295/barclays-deal-of-the-century-1009/ |access-date=2025-04-29 |magazine=Esquire |language=en-US}}</ref> Fuld steered Lehman through the [[1997 Asian financial crisis]],<ref>{{Cite book|last=Salinger|first=Lawrence M.|url=https://books.google.com/books?id=0Vh2AwAAQBAJ&pg=PA550|title=Encyclopedia of White-Collar and Corporate Crime|date=June 14, 2013|publisher=SAGE Publications|isbn=978-1-4522-7616-8|pages=550|language=en}}</ref> and when the [[Long Term Capital Management]] hedge fund collapsed in 1998.<ref>{{Cite news|last=Wilchins|first=Dan|date=June 3, 2008|title=Lehman shares plunge on capital raising concern|language=en|work=Reuters|url=https://www.reuters.com/article/us-lehman-capital-idUSBNG23649720080603|access-date=September 30, 2020}}</ref><ref name="reuters.com">{{cite news|author=Christian Plumb and Dan Wilchins|date=September 14, 2008|title=Lehman CEO Fuld's hubris contributed to meltdown|work=Reuters|url=https://www.reuters.com/article/idUSN1341059120080914|access-date=February 15, 2012}}</ref>

In 2001, the firm acquired the private-client services, or "PCS", business of [[Cowen & Co.]]<ref name="gasparino">{{cite web|url=http://www.financialexpress.com/old/fe/daily/20000718/fec18038.html |title=Lehman Brothers to take over SG Cowen's brokerage division |work=The Financial Express |author=Charles Gasparino |date=July 18, 2000 |access-date=February 15, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20130514235028/http://www.financialexpress.com/old/fe/daily/20000718/fec18038.html |archive-date=May 14, 2013 }}</ref> and later, in 2003, aggressively re-entered the asset-management business, which it had exited in 1989.<ref name=PI>{{cite news |url=http://goliath.ecnext.com/coms2/gi_0199-867982/BACK-AGAIN-Lehman-returns-to.html |title=Back Again: Lehman returns to institutional management with Lincoln deal; Purchase of fixed-income business ends 13-year absence |author=Christine Williamson |work=Pensions & Investments |publisher=Goliath |access-date=February 15, 2012}}</ref> Beginning with $2 billion in [[assets under management]], the firm acquired the [[Crossroads Group]], the fixed-income division of Lincoln Capital Management<ref name=PI/> and [[Neuberger Berman]].<ref name="thomas">{{cite news |url=https://query.nytimes.com/gst/fullpage.html?res=9507EFDB143FF930A15754C0A9659C8B63 |title=Market Place; Lehman to Buy Neuberger Berman For $2.6&nbsp;Billion | first=Landon Jr. |last=Thomas |date=July 23, 2003 |work=The New York Times}}</ref> These businesses, together with the PCS business and Lehman's private-equity business, comprised the Investment Management Division,<ref>{{Cite web|last=Gasparino|first=Charlie|date=August 4, 2008|title=Lehman Weighs Sale of Investment Management Unit|url=https://www.cnbc.com/2008/08/04/lehman-weighs-sale-of-investment-management-unit.html|access-date=September 30, 2020|website=CNBC}}</ref> which generated approximately $3.1 billion in net revenue.<ref>{{Cite web|title=Lehman Brothers Holdings Inc.|url=https://www.sec.gov/Archives/edgar/data/806085/000110465908005476/a08-3530_110k.htm|access-date=September 30, 2020|website=SEC}}</ref>

During the [[subprime mortgage crisis]], Fuld kept his job while CEOs of rivals like [[Bear Stearns]], [[Merrill Lynch]], and [[Citigroup]] were forced to resign.<ref name="reuters.com" /> 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.

In May 2008, prior to going bankrupt, the firm had $639 billion in assets.<ref>{{Cite news|last=Wilchins|first=Dan|date=September 15, 2008|title=Lehman files for bankruptcy, plans to sell units|language=en|work=Reuters|url=https://www.reuters.com/article/us-lehman-bankruptcy-idUSN1546989720080915|access-date=September 30, 2020}}</ref>

=== Response to September 11, 2001 attacks ===
[[Image:Lehman Brothers Times Square by David Shankbone.jpg|thumb|The former New York City headquarters now owned by [[Barclays]]]]
On September 11, 2001, Lehman occupied three floors (38–40) of [[List of tenants in 1 World Trade Center (1971–2001)|1 World Trade Center]], where one of its employees was killed in the terrorist attacks of that day.<ref name=":4">{{Cite web|date=September 1, 2002|title=Impact of 9/11 on Lehman Brothers, Merrill Lynch and American Express|url=https://www.cio.com/article/2440607/impact-of-9-11-on-lehman-brothers--merrill-lynch-and-american-express.html|access-date=September 30, 2020|website=CIO|language=en}}</ref><ref>{{Cite news|last1=Gibbs|first1=Geoff|last2=Adams|first2=Richard|last3=Pandya|first3=Nick|last4=Bowers|first4=Simon|last5=Branigan|first5=Tania|last6=Hall|first6=Sarah|date=September 14, 2001|title=Grim roll call of WTC companies|language=en-GB|work=The Guardian|url=https://www.theguardian.com/world/2001/sep/14/september11.usa10|access-date=September 30, 2020|issn=0261-3077}}</ref> Its global headquarters in [[Three World Financial Center]] were severely damaged and rendered unusable by falling debris, displacing over 6,500 employees.<ref name=":4" /> Trading operations moved to [[Jersey City]], [[New Jersey]].<ref>{{Cite news|last=Blair|first=Jayson|date=March 1, 2002|title=Amex Coming Back to Lower Manhattan|language=en-US|work=The New York Times|url=https://www.nytimes.com/2002/03/01/nyregion/amex-coming-back-to-lower-manhattan.html|access-date=September 30, 2020|issn=0362-4331}}</ref> When stock markets reopened on September 17, 2001, Lehman's sales and trading capabilities were restored.<ref>{{Cite news|last=Berenson|first=Alex|date=September 17, 2001|title=AFTER THE ATTACKS: THE MARKETS; Uncertainly, Market Reopens Today|language=en-US|work=The New York Times|url=https://www.nytimes.com/2001/09/17/business/after-the-attacks-the-markets-uncertainly-market-reopens-today.html|access-date=September 30, 2020|issn=0362-4331}}</ref>

In the ensuing months, the firm spread its operations across New York City in over 40 temporary locations.<ref name="egbert" /> The investment-banking division converted the first-floor lounges, restaurants, and all 665 guest rooms of the [[Sheraton New York, Times Square|Sheraton Manhattan Hotel]] into office space.<ref name="egbert">{{cite news |title=Lehman Checks into Sheraton |url=http://articles.nydailynews.com/2001-09-19/news/18366151_1_lehman-brothers-investment-bank-sheraton-new-york |work=[[Daily News (New York)|Daily News]] |date=September 19, 2001 |author=Bill Egbert |publisher=nydailynews.com |access-date=February 15, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120514020349/http://articles.nydailynews.com/2001-09-19/news/18366151_1_lehman-brothers-investment-bank-sheraton-new-york |archive-date=May 14, 2012}}</ref>

The bank also experimented with [[flextime]] (to share office space) and [[remote work]] via [[virtual private networking]] after the attacks.<ref>{{Cite book |last=Hewlett |first=Sylvia Ann |url=https://books.google.com/books?id=wPW_D1KmS7gC&pg=PA233 |title=Off-Ramps and On-Ramps: Keeping Talented Women on the Road to Success |journal=Harvard Business Review |date=May 15, 2007 |publisher=[[Harvard Business Press]] |isbn=978-1-4221-5983-5 |volume=83 |pages=43–6, 48, 50–4 passim |language=en |pmid=15768675 |issue=3}}</ref><ref name=":7" /> In October 2001, Lehman purchased a 32-story, {{convert|1050000|sqft|m2|adj=on}} office building for a reported sum of $700 million.<ref name=":5">{{Cite news |title=Lehman buys NYC office building |url=https://money.cnn.com/2001/10/08/companies/lehman_morgan/ | work=[[CNN]] |date=October 8, 2001}}</ref><ref name=":6">{{Cite news|last=Bagli|first=Charles V. |title=Morgan Stanley Selling Nearly Completed Office Tower to Lehman for $700 Million |work=[[The New York Times]] |url=https://www.nytimes.com/2001/10/09/nyregion/morgan-stanley-selling-nearly-completed-office-tower-to-lehman-for-700-million.html|date=October 9, 2001 | url-access=limited |issn=0362-4331}}</ref> The building, located at [[745 Seventh Avenue]], had recently been completed, and not yet occupied, by rival [[Morgan Stanley]].<ref name=":5" /><ref name=":6" /> Lehman began moving into the new facility in January and finished in March 2002.<ref name="nymag.com">{{cite web|title=Print Page|url=https://nymag.com/print/?/news/business/52603/|access-date=October 7, 2013|publisher=Nymag.com}}</ref> The firm did not return to [[Three World Financial Center]] as its structural integrity had not been given a clean bill of health, and the company could not have waited for repairs to Three World Financial Center to conclude.<ref>{{Cite news|last=Bagli|first=Charles V.|date=September 10, 2002|title=Tower at Financial Center Changes Hands for a Song|language=en-US|work=The New York Times|url=https://www.nytimes.com/2002/09/10/nyregion/tower-at-financial-center-changes-hands-for-a-song.html|access-date=September 30, 2020|issn=0362-4331}}</ref><ref>{{Cite news|last1=Grant|first1=Peter|last2=Gasparino|first2=Charles|date=October 9, 2001|title=Lehman Brothers Plans to Move Headquarters Out of Wall Street|language=en-US|work=[[The Wall Street Journal]]|url=https://www.wsj.com/articles/SB1002550120224362280|access-date=September 30, 2020|issn=0099-9660}}</ref>

After the attacks, Lehman's management placed increased emphasis on [[business continuity planning]].<ref>{{Cite web|last=Scalet|first=Sarah D.|date=September 1, 2002|title=IT Executives From Three Wall Street Companies – Lehman Brothers, Merrill Lynch and American Express – Look Back on 9/11 and Take Stock of Where They Are Now|url=https://www.cio.com/article/2440608/it-executives-from-three-wall-street-companies---lehman-brothers--merrill-lynch-an.html|access-date=September 30, 2020|website=CIO|language=en}}</ref> Aside from its headquarters in Three World Financial Center, Lehman maintained operations-and-backoffice facilities in [[Jersey City]], space that the firm considered leaving prior to 9/11.<ref name=":7" /> The space was not only retained, but expanded, including the construction of a backup-trading facility.<ref name=":7">{{cite web|url=http://www.citrix.com/site/resources/dynamic/customerStory/lehman_bros_12_03_cs_us.pdf |title=Cast Study: Lehman Brothers |year=2003 |publisher=Citrix.com |access-date=February 15, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20121124071351/http://www.citrix.com/site/resources/dynamic/customerStory/lehman_bros_12_03_cs_us.pdf |archive-date=November 24, 2012 }}</ref>

=== June 2003 SEC litigation ===
In June 2003, the company was one of ten firms which simultaneously entered into a settlement with the [[U.S. Securities and Exchange Commission]] (SEC), the [[New York State Attorney General|Office of the New York State Attorney General]] and various other securities regulators, regarding undue influence over each firm's research analysts by its investment-banking divisions.<ref name=":8">{{Cite news|last=Morgenson|first=Gretchen|date=May 19, 2012|title=Is Insider Trading Part of the Fabric?|language=en-US|work=The New York Times|url=https://www.nytimes.com/2012/05/20/business/is-insider-trading-part-of-the-fabric-on-wall-street.html|access-date=September 30, 2020|issn=0362-4331}}</ref><ref name=":9" /> Regulators alleged that the firms had improperly associated analyst compensation with the firms' investment-banking revenues, and promised favorable, market-moving research coverage, in exchange for underwriting opportunities.<ref>{{Cite news|last1=Scannell|first1=Kara|last2=Craig|first2=Susanne|date=March 17, 2010|title=SEC Tried to Ease Curbs|language=en-US|work=[[The Wall Street Journal]]|url=https://www.wsj.com/articles/SB10001424052748704743404575128122174622274|access-date=September 30, 2020|issn=0099-9660}}</ref> The settlement, known as the "global settlement", provided for total financial penalties of $1.4 billion, including $80 million against Lehman, and structural reforms including a complete separation of investment banking departments from research departments, no analyst compensation, directly or indirectly, from investment-banking revenues, and the provision of free, independent, third-party, research to the firms' clients.<ref name=":8" /><ref name=":9">{{Cite news|last=Henriques|first=Diana B.|date=June 17, 2003|title=Lehman Aided in Loan Fraud, Jury Says|language=en-US|work=The New York Times|url=https://www.nytimes.com/2003/06/17/business/lehman-aided-in-loan-fraud-jury-says.html|access-date=July 21, 2020|issn=0362-4331}}</ref>

=== Rise of mortgage origination (1997–2006) ===
Lehman was one of the first Wall Street firms to move into the business of [[mortgage origination]]. In 1997, Lehman bought Colorado-based lender, Aurora Loan Services (not a bank), an [[Alt-A]] lender. In 2000, to expand their mortgage origination pipeline, Lehman purchased West Coast subprime mortgage lender BNC Mortgage LLC. Lehman quickly became a force in the subprime market. By 2003 Lehman made $18.2 billion in loans and ranked third in lending. By 2004, this number topped $40 billion. By 2006, Aurora and BNC were lending almost $50 billion per month.<ref>{{Cite book |title=Uncontrolled Risk |last=Williams |first=Mark |publisher=McGraw-Hill Education |date=April 12, 2010 |isbn=978-0071638296 |page=129}}</ref> By 2008, Lehman had assets of $680 billion supported by only $22.5 billion of firm capital. From an equity position, its risky commercial real estate holdings were thirty times greater than capital. In such a highly leveraged structure, a 3 to 5 percent decline in real estate values would wipe out all capital.<ref>{{Cite book|last1=McDonald|first1=Lawrence G.|url=https://books.google.com/books?id=p0yWHm0Qw14C&q=lehman+brothers+book+mortgage|title=A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers|last2=Robinson|first2=Patrick|date=October 12, 2010|publisher=Crown|isbn=978-0-307-58835-7|language=en}}</ref>