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A source at the investment house told FTAdviser staff had turned up to work this morning (15 September) and been told to go home as there was "nothing left to do".

He said: "Managers are just sending staff home and we have been made redundant en masse. Some people are being retained to clear up things and tie up the odd loose financial end, but there is no point hanging around and just waiting for the inevitable.

"To say it's gloomy here would be an understatement. The departments left behind are just sitting there waiting their turn".

However, a spokesman for the beleaguered investment house said: "No one has been sent home officially and there is no obligation on staff to go home.

"Obviously some people have decided to leave as they have to sort their stuff out. Things are proceeding in a very departmental way and things are being packed up."

The move comes after Lehman filed a petition for Chapter 11 in the US.

In a statement to the stock exchange, the board of directors of Lehman Brothers stated they authorised the filing of the petition in order to protect its assets and maximize value.

In response, the Financial Services Authority (FSA) said it was "working closely with the US authorities to ensure an orderly wind down of its principal UK trading subsidiary, Lehman Brothers International (Europe), which was placed into administration earlier this morning".

The regulator added: "The FSA is working with market practitioners, including the London Clearing House (LCH), to ensure the process connected with the winding down of this wholesale business is completed in an orderly manner to minimise any market disruption."