TOKYO, September 16 – Japan\’s financial watchdog late Monday ordered Lehman Brothers\’ local unit to halt operations until September 26 after the Wall Street investment giant filed for bankruptcy.,
In a late-night statement, the Financial Services Agency said it was immediately ordering Lehman Brothers Japan Inc. to suspend all business except for returning assets to customers.
It said the suspension took effect immediately after the once venerable firm filed in New York for bankruptcy protection, and would last until September 26.
Japan, the world\’s second largest economy, was a major market for Lehman Brothers. According to Kyodo News, the Japanese unit manages some 1.2 trillion yen (11.5 billion dollars) in assets, mainly for institutional investors.
Japanese financial markets were closed on Monday for a public holiday, amid a bloodbath on global stock markets following Lehman Brother\’s collapse and the sale of peer Merrill Lynch.
The Tokyo market reopens at 9 am (0000 GMT) on Tuesday.
It was the second statement issued by the Japanese authorities on the Lehman Brothers crisis.
The Financial Services Agency earlier ordered Lehman Brothers to retain assets in Japan that are equivalent to its liabilities in the Asian financial giant.
The agency said it was taking action to make sure "not to damage the benefits of creditors and investors through the outflow of money from Lehman\’s assets to overseas affiliated companies" following the bankruptcy.
The financial watchdog also issued orders to Lehman Brothers Japan to "take full measures for investor protection" and to fully inform all investors about their assets in Japan.
The Nikkei business daily said that the watchdog was in contact with US financial authorities and Japanese financial institutions to assess the damage.
"The US authorities say they will protect customers\’ assets. We are analysing a possible effect" on the Japanese financial sector," an anonymous official at the watchdog was quoted as saying.