Lehman Brothers Holdings Inc. is suing Daiwa Securities Capital Markets Co. over hundreds of soured swaps and options, claiming the Japanese investment bank shortchanged it on hundreds of derivatives contracts after Lehman’s bankruptcy to reap a multimillion-dollar windfall, the Wall Street Journal reported today. In a lawsuit filed with U.S. Bankruptcy Court in New York, lawyers for Lehman say the bank was “in the money” to the tune of $75 million on 955 derivatives transactions — mainly interest rate and credit default swaps — with Daiwa at the time of Lehman’s 2008 bankruptcy filing. Daiwa used “commercially unreasonable and bad-faith valuation techniques, including deducting tens of millions of dollars of ‘unwind costs’ that it did not incur” from its valuations of the derivatives transactions, Lehman’s lawyers claim in the suit, filed last week. Lehman is asking Bankruptcy Judge Shelley C. Chapman for the $75 million it says it was owed at the time the swaps were terminated, plus interest. It is also asking the judge to toss Daiwa’s $46 million claims against Lehman.
