It Is All Fairly Simple

Lehman Brothers' stock collapse, and lost $40 billion dollars in investors money. Think of this is terms of gold coins. Mr and Mrs Christian Pentacost invested 10,000 gold coins in Lehman stock. Mr Abe Lehman took the coins and gave the couple 10,000 paper shares of stock.

The coins didn't vanish, but the stock did, and the investors have nothing. Money doesn't vanish, it merely changes hands.