San Antonio Business Journal
Published: 10-01-08
Texas Comptroller Susan Combs said Wednesday that she has terminated the state’s contract with Lehman Brothers Inc. which provided marketing and client services to the TexPool and TexPool Prime investment programs.
The two programs are investment pools for local governments. Combs stressed that Lehman did not provide investment management to TexPool or TexPool Prime. Lehman Brothers Inc. is owned by Lehman Brothers Holdings Inc. which filed for Chapter 11 bankruptcy protection on Monday.
Combs says the bankruptcy filing poses no threat to the local governments invested in TexPool and TexPool Prime. That’s because those investments are managed by a separate company Federated Investors Inc.
But even though Lehman Brothers only handled marketing and client services Combs says it was necessary to end the contract in order to maintain investors’ confidence.
“Investors are currently suffering the effects of one of the greatest crises of confidence in the capital markets in recent memory” Combs said in her termination notice. “Given Lehman Brothers’ declaration of bankruptcy the fragile state of the capital markets and the heightened sensitivity of investors to adverse news the continued affiliation of TexPool with Lehman Brothers is unacceptable.”
The comptroller directed Federated Investors to take over marketing and client services of TexPool from Lehman. Lehman Brothers has 30 days to make the transition.
