NEW YORK - LEHMAN Brothers in Europe has asked its US counterpart to give back more than US$8 billion (S$11.4 billion) that it says was trapped when Lehman's holding company filed for bankruptcy protection in New York a week ago.

Lehman Brothers International in Europe (LBIE) wants the money back even though key US operations will be transferred to Barclays, the British bank that is buying Lehman Brothers' North American banking business.

Some clients of Lehman's European arm believe they could get back more of their money if the cash is moved back to London, and they asked a US bankruptcy judge to make sure the money is not absorbed by Barclays.

The money was moved to the US in a routine transaction that happens over the weekends, according to a complaint filed as part of Lehman's bankruptcy proceedings.

After the funds moved to the US on September 12, they may not have moved back, since Lehman filed for bankruptcy - the biggest in US history - before dawn on the following Monday.

The same day as the bankruptcy filing, Lehman in Europe put itself under administration, a bankruptcy-style liquidation process that is used in the UK and elsewhere.

PricewaterhouseCoopers is the administrator in charge of winding down Lehman's European operations.

In a court filing on Friday, lawyers for Amber Capital Investment Management wrote that there's a risk the US$8 billion will be included as part of the Barclays sale.

'The proposed sale transaction with Barclays has moved at a rapid pace and parties have not had an opportunity to trace the LBIE cash and investigate the assets that are proposed to be transferred as part of the sale,' the filing said.

A lawyer for Bay Harbour Management, which has used Lehman as a prime broker, argued in court papers that the money may have been 'misappropriated.'

The lawyer, Mr David Rosner, said the money transfer 'may have been manipulated to prop up LBIE for sale,' although he said there is no way of knowing whether this was the case.

'The Barclays sale threatens to further dissipate the ability of LBIE's administrator and customers to recover their rightful property and to protect Barclays from claims to this cash,' Bay Harbour lawyers said in their filing.

Mr James Peck, the judge in Lehman's bankruptcy case in New York, said on Friday that the court would examine the issue in greater detail, but he put it aside so he could focus first on the sale of Lehman's investment banking and trading units as well as certain real estate assets to Barclays.

Mr Peck approved the sale just after Saturday midnight, and under the agreement with Barclays, the deal must close by Tuesday.

Sources reported that Japan's Nomura and Barclays might bid for Lehman's British-based equities and investment banking business. The source also reported that BNP Paribas was interested.

A spokesman for Lehman's bankruptcy law firm in the US, Weil, Gotshal & Manges, did not immediately return calls for comment on Sunday.

Further sources said the request for the funds to be returned was made in a letter sent on Wednesday, but she could not immediately provide a copy of the document.

The money would be used to pay back creditors, adding that salaries were being funded through other financing until the end of the month.

British Prime Minister Gordon Brown said his government was working with the US government to get the cash back.

While mistakes had been made in Britain, he said the primary blame for the crisis had to go to the United States, and he urged the adoption of international financial regulations.

'It's fair to say also that we're in a new world, and I think what people haven't appreciated is we've now got global financial systems but we've only got national regulators to cover them,' Mr Brown told the BBC.

'I've been pressing for some years, and I wish I could have persuaded other countries to do what I wanted, and that was to create a global system of financial regulation.' -- AP