PIMCO Loses $3.4 Billion on Lehman Brothers Investment

Representing Investors Nationwide

According to a June 7, Wall Street Journal article, Pacific Investment Management Co., (PIMCO) and fund manager Bill Gross took a big bet on Lehman Brothers and lost. According to the WSJ article, losses on Lehman bonds could exceed $3.4 billion, depending on the ultimate value the debt fetches in the pending bankruptcy proceeding.

PIMCO is one of the largest money managers for in the United States, managing funds for both individuals and institutions. It is but the latest victim of the Lehman Brothers fiasco that culminated with the firm’s declaring bankruptcy on September 15, 2008.

The bankruptcy filing wiped out billions of dollars of investment capital, much of which was invested by retirees looking for income producing vehicles to fund their retirements. Many of these investors were told Lehman debt was a secure investment although there was mounting evidence in late 2007 and 2008, the firm may be in trouble and could possibly fail. That belief became more of a reality when investment banking giant Bear Stearns (now JP Morgan Securities) collapsed in March of 2008.

Much of the Lehman debt was packaged into structured products to camouflage the fact investors were really purchasing unsecured debt. Many brokers brought the new issues to market and recommended them to their retail clients seeking income. If you lost money as a result of purchasing a Lehman debt related investments in late 2007 or 2008, please contact our office for a case evaluation. Thank you.