Lehman Brothers Financial SA (LEHNQ)

[hestheman]

This is where it gets interesting though. Maratanyo is incorrect when he states that it is a "misconception" that CT's are a hybrid of debt/equity. Maratanyo states "We are class 10B...period". Not quite. If you know how a trust preferred security is created what i'm about to say will make sense. Companies create a trust preferred security by creating a trust (hence the name trust preferred) issuing debt to a new entity, while that trust issues the trust preferred security/stock. Therefore, we ARE a security/equity albeit we were issued by that trust (or these sub bonds) that's why they call us a hybrid because we have characteristics of both equity and debt. This is why BNYM says we are class 10B but Weil firm insists we are class 12. Quite simply we are both. Here's a kicker... When BANK HOLDING COMPANIES issue trust preferred securities they are treated as capital (equity) rather than debt due to regulatory purposes. The main advantages trust preferred securities have for banks are favorable TAX treatment. In bankruptcy however, trust preferred securities are classified as debt. What could TPS be classified as if they survive reorganization? Answer: 3 words Old..Cold...Equity.