[2] Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch), with about 25,000 employees worldwide.

[5] On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection following the exodus of most of its clients, drastic declines in its stock price, and the devaluation of assets by credit rating agencies.

[6][7][8] Lehman's bankruptcy filing is the largest in US history, having beaten the previous record holder Worldcom, Inc.,[9] and is thought to have played a major role in the unfolding of the 2007–2008 financial crisis.

The following day, major British bank Barclays announced its agreement to purchase, subject to regulatory approval, a significant and controlling interest in Lehman's North American investment-banking and trading divisions, along with its New York headquarters building.

[15] In 1844, 23-year-old Hayum Lehmann, who changed his name to Henry Lehman,[16] the son of a Jewish cattle merchant, emigrated to the United States from Rimpar, Bavaria.

[23][29] In that year, under Emanuel's son Philip Lehman, the firm partnered with Goldman, Sachs & Co.,[29][30][31] to bring the General Cigar Co. to market,[32] followed closely by Sears, Roebuck and Company.

[41] In the 1930s, Lehman underwrote the initial public offering of the first television manufacturer, DuMont Laboratories, and helped fund the Radio Corporation of America (RCA).

[46] Peterson led the firm from significant operating losses to five consecutive years of record profits with a return on equity among the highest in the investment-banking industry.

[60] In addition, Lehman's board of directors, which included retired CEOs like Vodafone's Christopher Gent and IBM's John Akers were reluctant to challenge Fuld as the firm's share price spiraled lower.

[79] Aside from its headquarters in Three World Financial Center, Lehman maintained operations-and-backoffice facilities in Jersey City, space that the firm considered leaving prior to 9/11.

[82] The settlement, known as the "global settlement", provided for total financial penalties of $1.4 billion, including $80 million against Lehman, and structural reforms including a complete separation of investment banking departments from research departments, no analyst compensation, directly or indirectly, from investment-banking revenues, and the provision of free, independent, third-party, research to the firms' clients.

[84] A March 2010 report by the court appointed examiner indicated that Lehman executives regularly used cosmetic accounting gimmicks at the end of each quarter to make its finances appear less shaky than they really were.

However, unlike typical repurchase agreements, these deals were described by Lehman as the outright sale of securities and created "a materially misleading picture of the firm's financial condition in late 2007 and 2008".

On March 16, 2008, after rival Bear Stearns was taken over by JPMorgan Chase in a fire sale, market analysts suggested that Lehman would be the next major investment bank to fall.

[90] On June 9, 2008, Lehman Brothers announced a US$2.8 billion second-quarter loss, its first since being spun off from American Express, as market volatility rendered many of its hedges ineffective during that time.

As a result, there was major management shakeup, in which Hugh "Skip" McGee III (head of investment banking) held a meeting with senior staff to strip CEO Richard Fuld and his lieutenants of their authority.

[96] The next day, Lehman announced a loss of $3.9 billion and its intent to sell off a majority stake in its investment-management business, which included Neuberger Berman.

[98][99] Lehman, after earlier rejecting questions on the sale of the company, was reportedly searching for a buyer as its stock price dropped another 40 percent on September 11, 2008.

[102][103][104] An article by journalist Matt Taibbi in Rolling Stone contended that naked short selling contributed to the demise of both Lehman and Bear Stearns.

[106] On Saturday, September 13, 2008, Timothy F. Geithner, then the president of the Federal Reserve Bank of New York, called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets.

[107] Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale; however, both Barclays and Bank of America ultimately declined to purchase the entire company, in the former case because the British government (in particular, the Chancellor of the Exchequer Alistair Darling and the CEO of the Financial Services Authority Hector Sants) refused to allow the transaction at the last minute, quoting stockholder regulations in the UK, despite a deal having apparently been completed.

[113] The morning witnessed scenes of Lehman employees removing files, items with the company logo, and other belongings from the world headquarters at 745 Seventh Avenue.

[11][125] On September 20, 2008, a revised version of the deal, a $1.35 billion (£700 million) plan for Barclays to acquire the core business of Lehman (mainly its $960-million headquarters, a 38-story office building[126] in Midtown Manhattan, with responsibility for 9,000 former employees), was approved.

"[129]Luc Despins, then a partner at Milbank, Tweed, Hadley & McCloy, the creditors committee counsel, said: "The reason we're not objecting is really based on the lack of a viable alternative.

[136] On September 29, 2008, Lehman agreed to sell Neuberger Berman, part of its investment management business, to a pair of private-equity firms, Bain Capital Partners and Hellman & Friedman, for $2.15 billion.

What followed was what many have called the "perfect storm" of economic distress factors and eventually a $700bn bailout package (Troubled Asset Relief Program) prepared by Henry Paulson, Secretary of the Treasury, and approved by Congress.

[140] This report revealed that Lehman Brothers used an accounting procedure termed repo 105 to temporarily exchange $50 billion of assets into cash just before publishing its financial statements.

[143] According to The Wall Street Journal, in March 2011, the SEC announced that they weren't confident that they could prove that Lehman Brothers violated US laws in its accounting practices.

[144] In October 2011, the administrators of Lehman Brothers Holding Inc. lost their appeal to overturn a court order forcing them to pay £148 million into their underfunded pensions plan.

The 2011 film Horrible Bosses features a character by the name of Kenny Sommerfield (played by P. J. Byrne) who worked at Lehman Brothers until its bankruptcy, ending up broke.