Lehman Brothers’ hedge-fund clients may have to pay more collateral on $65 billion of assets frozen when the investment bank went bankrupt a month ago.

Lehman's London-based prime brokerage has about 3,500 active clients including hedge funds that own about $45 billion in securities, Steven Pearson, the partner atPricewaterhouseCoopers responsible for unravelling the unit, was quoted as saying by Bloomberg. They hold an additional $20 billion in short positions, or bets that prices will fall.

While investors are largely unable to access their Lehman accounts, the value of the securities continues to fluctuate along with the markets. The clients may be required to put up more collateral if the value of those securities drops, a process known as a margin call.

``If your bank fails, you still have to pay your mortgage,'' Mr Pearson said. ``Who is the holder of the risk of the securities? The hedge funds. If the value of the securities fell, they have to meet margin calls.''

Lehman's bankruptcy, the world's biggest, has rocked hedge funds that relied on the firm to provide loans, clear trades and handle administrative tasks. MKM Longboat Capital Advisors will shut its $1.5 billion Multi-Strategy fund in part because assets are stuck at Lehman. The freeze has contributed to the $1.9 trillion hedge fund industry's worst year in two decades, according to Chicago-based Hedge Fund Research.

Managers with assets at Lehman include New York-based firms Amber Capital LP and Bay Harbour Management LLC, as well as RAB Capital and GLG Partners, both based in

London. Olivant, run by ex-UBS President Luqman Arnold, said this month it can't access a 2.78 per cent UBS stake it held through Lehman.