REGISTRATION NO. 33-65674
                              NASD File No. 930707011
                                   Rule 424(b)(2)

   
SECOND AMENDED PRICING SUPPLEMENT NO. 40
DATED APRIL 6, 1994
(To Prospectus dated October 4, 1993 as supplemented by
a Prospectus Supplement dated March 4, 1994)
    


                  LEHMAN BROTHERS HOLDINGS INC.


                   Medium Term Notes, Series E


             Due 9 Months or More from Date of Issue
                         (Indexed Notes)
                   ___________________________

Principal Amount:         $20,000,000.

   
Stated Maturity:          Januaruy 17, 1995
    

Issue Date:               April 8, 1994

Issue Price:              100%

Agent's Commission:       .10%*

   
Interest Payment Dates:   July 15, 1994, October 15, 1994 and
                          Januaruy 17, 1995 (or, if any such day
                          is not a Business Day, the next
                          following Business Day)
    

Initial Interest Rate:    To be determined on the initial
                          Interest Determination Date.  See
                          "Description of Indexed Notes -
                          Interest".

Interest Rate Basis:      The interest rate for any Interest
                          Payment Period will be equal to 5.00%
                          times the Index Ratio for such Interest
                          Payment Period.  See "Description of
                          Indexed Notes-Interest" below.

__________________

*  The Agent has purchased the Indexed Notes as principal in this
transaction and may resell any of such Indexed Notes to another
broker-dealer (acting as principal for the purposes of resale) at
a discount and the discount allowed to such broker-dealer will
not exceed the discount received by the Agent in such transaction.

Spread:                   None

Spread Multiplier:        None

Interest Determination
Dates:                    Second Business Day preceding each
                          Interest Payment Date

Calculation Agent:        Lehman Brothers Special Financing Inc.

Interest Payment Period:  Quarterly

Interest Reset Period:    Quarterly

Form of Note:             Book-Entry Note


The aggregate principal amount of this offering is $20,000,000
and relates only to Pricing Supplement No. 40.  Medium-Term
Notes, Series E may be issued by the Company in an aggregate
principal amount of up to $2,500,000,000 and, to date, including
this offering, an aggregate of $1,301,150,000 Medium-Term Notes,
Series E have been issued and are outstanding.


                  DESCRIPTION OF INDEXED NOTES

I.   GENERAL

The following  description of the particular terms of the Indexed
Notes  (as   defined  below)   supplements,  and  to  the  extent
inconsistent therewith  replaces, the  description of the general
terms and  provisions of  the Notes set forth in the accompanying
Prospectus Supplement  and the description of Debt Securities set
forth in  the  accompanying  Prospectus,  to  which  descriptions
reference is  hereby  made.    All  terms  used  herein  but  not
otherwise  defined   herein  and   which  are   defined  in   the
accompanying Prospectus  or Prospectus  Supplement shall have the
meanings therein assigned to them.



II.  INTEREST

   
Interest on  the Indexed  Notes in respect of an Interest Payment
Period (as  defined below)  will be payable quarterly on July 15,
1994, October 15, 1994 and Januaruy 17, 1995, or in the event that
any such  day is  not a  Business Day,  then on  the  immediately
following day that is a Business Day (each such day, an "Interest
Payment Date").   With  respect to  any  Interest  Payment  Date,
interest on  the Indexed Notes will accrue from and including the
previous Interest  Payment Date  (or in  the case  of  the  first
Interest Payment  Date, April  8, 1994)  to  but  excluding  such
Interest Payment  Date (or  in the  case  of  the  last  Interest
Payment Date,  to but  excluding  January  15,  1995)  (each,  an
"Interest Payment Period").
    

For any  Interest Payment Period, the interest rate will be equal
to 5.00%  times the Index Ratio for such Interest Payment Period,
and interest  payable will  be calculated  based  on  the  actual
number of  days in  such  Interest  Payment  Period  and  a  year
consisting of  360 days.   The  "Index  Ratio"  for  an  Interest
Payment Period  will be  determined by dividing (i) the number of
days in  such Interest Payment Period for which LIBOR (as defined
below) falls  in the  range specified  below  for  such  Interest
Payment Period  by (ii)  the number  of  days  in  such  Interest
Payment Period.

                                           LIBOR Range

                              Greater than    and      Less than
Interest Payment Period       or equal to             or equal to
- ------------------------      ------------           ------------

July 15, 1994                      0.00%                4.75%

October 15, 1994                   0.00%                5.00%

   
Januaruy 17, 1995                   0.00%                5.25%
    


The Interest  Determination Date  with respect  to each  Interest
Payment Date  will be  the second  Business  Day  preceding  such
Interest Payment Date.  Determinations of the Index Ratio will be
made by  Lehman Brothers Special Financing Inc. (the "Calculation
Agent") on the relevant Interest Determination Date.

III. INDEX RATIO

For purposes  of calculating  the Interest Ratio, "LIBOR" for any
day in  an Interest  Payment Period  will be  established by  the
Calculation Agent  and will  equal the  rate  for  United  States
dollar deposits  for three  months which appears on Telerate Page
3747 (as  defined below)  as of  11:00 A.M., London time, for the
second preceding  London Banking  Day (the  "LIBOR  Determination
Date") provided  that such rate appears on Telerate Page 3747 for
such date.

If such  rate does  not appear,  LIBOR will be determined on such
LIBOR Determination  Date as  described in  the paragraph  below.
Telerate Page  3747 means  the display  designated as such on the
Dow Jones  Telerate Service  (or such  other page  as may replace
such page  on that  service, or  such other  service  as  may  be
nominated as the information vendor for the purpose of displaying
London inter-bank offered rates of major banks).  "London Banking
Day" is  a day  on which  banking institutions  in  the  City  of
London, England  are not  required or  authorized by  law  to  be
closed.

If such rate for such LIBOR Determination Date does not appear on
Telerate Page 3747, the Calculation Agent will request of each of
the Reference  Banks (which shall be major banks that are engaged
in transactions  in the London inter-bank market, selected by the
Calculation Agent)  to provide  the Calculation  Agent  with  its
offered quotation  for United  States dollar  deposits for  three
months, beginning on the second London Banking Day following such
date, to  prime banks  in the London inter-bank as of 11:00 A.M.,
London time,  on such  date.   If at  least two  Reference  Banks
provide the Calculation Agent with such offered quotations, LIBOR
on such  date will  be the  arithmetic mean  (rounded upwards, if
necessary, to the nearest one-sixteenth of a percent) of all such
quotations.   If on  such date  fewer than  two of  the Reference
Banks provide  the Calculation  Agent with  quotations, LIBOR  on
such date  will be  the  arithmetic  mean  (rounded  upwards,  if
necessary, to  the nearest  one-sixteenth of  a percent)  of  the
offered per  annum rates  which one  or more leading banks in The
City of New York selected by the Calculation Agent are quoting as
of 11:00  A.M., New  York City  time, on  such  date  to  leading
European banks  for  United  States  dollar  deposits  for  three
months; provided,  however, that if such banks are not quoting as
described above,  LIBOR will  be  the  LIBOR  applicable  to  the
immediately preceding LIBOR Determination Date.

IV.  PRINCIPAL REPAYMENT

   
The Indexed  Notes mature  on Januaruy 17, 1995, and the principal
amount of  the Indexed  Notes will  be repaid  on such day (or if
such day is not a Business Day, on the following Business Day).
    


      CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

Set forth  below is  a summary  of certain  United States federal
income tax  consequences resulting  from the ownership of Indexed
Notes.   Such consequences are in addition to those summarized in
the accompanying Prospectus Supplement under the heading "Certain
United States  Federal Income  Tax Consequences."   This  summary
does not  address special  rules which  may apply  to  particular
types of investors.


TAXATION OF U.S. INVESTORS
          The Indexed  Notes will  constitute Short-Term Original
Issue Discount  Notes because  the term  of the  Indexed Notes is
less than  one year.   See  "Certain United States Federal Income
Tax Consequences  - Original  Issue Discount"  in the Prospectus.
For United  States Holders  subject to  the rules  for short term
obligations, the  appropriate tax accounting for interest payable
on the  Indexed Notes is not clear.  The Internal Revenue Service
has issued proposed regulations under the original issue discount
provisions  for   debt  instruments   providing  for   contingent
payments.  Whether these regulations would apply and how interest
payable on  the Indexed  Notes would  be taken into account under
the proposed  regulations is unclear.  Because of the uncertainty
regarding  the  appropriate  tax  accounting  treatment  for  the
Indexed Notes,  potential investors  are advised to consult their
tax advisors as to the Indexed Notes.


TAXATION OF CERTAIN FOREIGN INVESTORS

          Payments with  respect to  an Indexed  Note (other than
payments of  interest to  certain parties related to the Issuer),
including payments  on any  sale or  disposition of  such Indexed
Note, will  not be  subject to  United  States  withholding  tax,
provided  that   the  non-United   States  Holder  complies  with
applicable certification requirements.


BACKUP WITHHOLDING AND INFORMATION REPORTING

          Distributions made  on the  Indexed Notes  and proceeds
from the  sale of Indexed Notes to or through certain brokers may
be subject  to a  "backup" withholding  tax of 31% of "reportable
payments" (including  interest accruals, original issue discount,
and, under  certain circumstances,  distributions in reduction of
principal amount)  unless, in  general, the  Noteholder  complies
with certain  procedures or  is an exempt recipient.  Any amounts
so withheld  from distributions  on the  Indexed Notes  would  be
refunded by  the Internal  Revenue Service or allowed as a credit
against the Noteholder's Federal income tax.

          Reports will  be made  to the  Internal Revenue Service
and to  Noteholders that  are not  excepted  from  the  reporting
requirements.

                      OTHER CONSIDERATIONS

RISKS ASSOCIATED WITH PAYMENTS OF INTEREST ON THE INDEXED NOTES

          The interest  rate payable  on  the  Indexed  Notes  in
respect of  any Interest  Payment Period will be reduced for each
day in  such Interest  Payment Period  that LIBOR exceeds the top
rate in the range applicable to such Interest Payment Period.  An
investor in  the Indexed  Notes may receive no payment in respect
of interest for one or more Interest Payment Periods.