Lehman Bros investors in $417 mn pact

Lehman,whose 2008 collapse contributed to the global financial crisis,got court approval on Tuesday on a creditor payback plan that would let it exit bankruptcy after three years. Judge James Peck and Lehman’s lead lawyer,Harvey Miller,were choked up,and a packed courtroom erupted in applause when the plan to end the largest-ever Chapter 11 bankruptcy was approved.

But even as it gets set to begin paying back its creditors,litigation surrounding its insolvency is far from over.

An investor class action lawsuit is ongoing against other underwriters and against Ernst & Young,Lehman’s former auditor.

Investors filed the lawsuit in 2008,accusing Lehman directors,then-CEO Richard Fuld among them,of painting a misleading picture of Lehman’s health in financial statements and securities offerings. Underwriters contributed to the fraud by failing to investigate and ensure the truthfulness of the statements,the investors said.

The company previously asked for a $90 million settlement with Fuld and other former Lehman directors to settle their role in the matter. With the addition of Friday’s $417 million accord,settlements in the case would total $507 million if approved.

Other underwriters included in the settlement are units of Bank of New York Mellon,Citigroup and Wells Fargo .

The case is In re Lehman Brothers Equity/Debt Securities Litigation,US District Court,Southern District of New York,No. 08-cv-5523.

The bankruptcy is In re Lehman Brothers Holdings Inc,US Bankruptcy Court,Southern District of New York,No. 08-13555.

FACTBOX-Lehman executives land all over Wall St

Former investment banking powerhouse Lehman Brothers Holdings Corp received court approval on Tuesday to exit bankruptcy early next year.

Once the fourth-largest US investment bank and brokerage,Lehman is now a collection of assets,real estate and investments. This latest court milestone clears the way for the sale of these assets. (To read Reuters’ story about the bankruptcy court proceedings,double click on )

Many former Lehman executives have disappeared from the spotlight,while several have landed jobs elsewhere on Wall Street:

* RICHARD DICK FULD JR. – The former chief executive and chairman has kept a low profile since he led the 161-year-old firm into bankruptcy,ending his own four-decade career at Lehman. Since 2009,Fuld has worked at Matrix Advisors LLC,a consulting and advisory firm he founded in midtown Manhattan. An assistant on Tuesday said Fuld declined to comment,and referred calls to an attorney. He is no longer registered with New York broker-dealer Legend Securities,a 16-month-long relationship that ended in September,according to Fuld’s FINRA records. Fuld is the subject of several pending state and federal regulatory cases,and a raft of private litigation.

* JOE GREGORY – Fuld’s long-time lieutenant and Lehman president has surfaced mostly in property sales logs,selling a Bridgehampton,New York,house for $20 million and selling a Park Avenue apartment for $4.4 million. Once an example of Lehman’s boom-era excess — he commuted to New York by helicopter and employed a staff of 30 — he has also sued Lehman’s estate seeking $230 million in deferred compensation.

* ERIN CALLAN – Lehman’s glamorous chief financial officer in late 2007 and early 2008 has been labeled as Wall Street’s Greta Garbo for her disappearance from the spotlight after she was fired in June 2008. After a brief stint as a Credit Suisse investment banker,she has been spending time in a 6-bedroom house in Long Island’s wealthy East Hampton.

* DAVID GOLDFARB – A former chief administrative officer,strategy official who served as a liaison to shareholders,Goldfarb was until recently a consultant to the Lehman estate. Efforts to reach Goldfarb were unsuccessful.

* CHRISTOPHER O’MEARA – O’Meara became Lehman’s chief risk officer when he was replaced by Callan,and remains an employee of the Lehman estate,where is he is co-head of a team responsible for unwinding the bank’s derivatives holdings.

* HERBERT BART MCDADE 3rd – The former Lehman president and chief operating officer took charge of Lehman Brothers in its final weeks after Fuld was pushed aside. McDade launched equities trading and underwriting business River Birch Capital with three Lehman veterans. The firm counts Roger Altman’s Evercore Partners as a significant investor.

* THOMAS RUSSO – The former Lehman vice chairman and general counsel is general counsel of financial services company American International Group,which like Lehman played a major role in the global financial crisis. Russo recently penned a book blaming the financial crisis on the US government and over-levered homeowners.

* HUGH SKIP MCGEE 3RD – The former global head of Lehman investment banking now serves in the same role at Barclays Capital,the Barclays PLC unit that acquired most of Lehman Brothers operating businesses in September 2008.

* IAN LOWITT – Lowitt took over as CFO from Callan in June until the firm collapsed three months later. He is chief operating officer of Barclays Wealth Americas,another unit of Barclays.

* MICHAEL GELBAND – The former head of capital markets at Lehman,who in 2007 warned his bosses about the excessive risks they were taking,returned in 2008 to try to avert collapse. Later in 2008 he landed at hedge fund firm Millennium Management LLC,where he manages its global fixed income business.

* SCOTT FREIDHEIM – The former Lehman investment bank executive last month took a job to run the European operations of Bahrain’s Investcorp Bank after three years at Eddie Lampert’s Sears Holdings Corp.

* HARVEY MILLER – Considered one of the world’s most prominent bankruptcy attorneys,Miller was Lehman’s lead lawyer from the start. The Weil Gotshal & Manges partner,who had previously advised General Motors and Continental Airlines Corp in its first bankruptcy,famously described Lehman as a melting ice cube. As the Lehman case pressed on,Miller’s public profile grew and even included an appearance in Inside Job,the 2010 documentary chronicling the financial meltdown. The 78-year-old is advising American Airlines in its $30 billion bankruptcy.