Lehman Notes - Structured Products, Lehman Brothers Principal Protected Notes, Lehman Backed Bonds, Lehman Brothers Bankruptcy

Vernon Healy Claim: UBS Used Bait and Switch While Selling Ohio Business Owner Lehman Notes

Naples, Fla. – UBS fraudulently misrepresented the investment products it was selling to an Ohio business owner, leading him to believe he was buying principal protected notes backed by UBS when in fact he was sold Lehman notes that were backed by the then financially struggling Lehman Brothers, a claim filed today by securities attorneys at Vernon Healy states.

The Ohio investor made numerous purchases for principal protected products recommended by his UBS financial advisor and totaling more than $150,000, the claim states. Even though the documents provided with the advisor’s initial sales pitch reflected UBS as the entity backing the notes, the actual purchase made on the investor’s behalf was for Lehman notes.

Moreover, the name “Lehman Brothers” did not appear on either the trade confirmation or on the monthly statements, the claim asserts. The sudden switch is especially troubling due to the fact that UBS recommended and sold the Ohio investor Lehman structured products just weeks before Lehman filed for bankruptcy. At that point, UBS clearly knew Lehman Brothers was in deep financial trouble, the claim asserts.

UBS had been well aware of Lehman Brothers financial woes long before it recommended structured products to the Ohio investor. Specifically, UBS had been propping up the faltering company with ultra-high interest loans in 2007 and 2008 while selling Lehman products to retail investors for huge profits.

“UBS engaged in a campaign to downplay and ignore concerns about Lehman’s creditworthiness,” said Chris Vernon, founder of Vernon Healy. “UBS encouraged, and in some cases even deceived its financial advisors into continuing to recommend these products to individual investors without advising them about Lehman’s credit and liquidity risks.”

Once the Lehman bankruptcy was underway, the Ohio business owner joined thousands of other Lehman notes holders left standing at the back of the line with all unsecured creditors.

In addition to compensatory damages, Vernon Healy is seeking significant punitive damages on behalf of the Ohio investor in light of UBS’s gross malfeasance, the claim states.

Vernon Healy has filed more than $12 million in Lehman notes arbitration claims on behalf of investors before the Financial Industry Regulatory Authority. The firm’s investigation of Lehman notes was featured in an AARP magazine article about the dangers of investing in structured products, which continue to be pitched by brokerage firms to retirees as safe investments. Vernon Healy’s ongoing investigation continues to reveal numerous concerns in relation to the sale of Lehman notes that have not been addressed by FINRA or federal regulators.

The securities attorneys at Vernon Healy represent individuals and businesses nationwide in disputes involving all manner of financial fraud and negligence, including Lehman notes, structured products, non-traded REITs, hedge funds, mutual funds, annuities, tax shelters and other investment products.

Contact:
Chris Vernon
Vernon Healy
(239) 649-5390
www.vernonhealy.com
www.lehmannotes.com

Vernon Healy Claim: UBS Deceived Texas Clients and Financial Advisors with Lehman Principal Protected Notes

Naples, Fla. – UBS fraudulently misrepresented Lehman principal protected notes not only to its brokerage firm clients but also to some of its own financial advisors, according to a claim filed today by securities fraud attorneys with the nationwide investor advocacy law firm Vernon Healy.

The nearly $300,000 claim against UBS filed by Vernon Healy today, alleges that the brokerage firm giant fraudulently sold Lehman brothers principal protected notes to a retired Texas couple after it knew that Lehman Brothers was in financial trouble, according to the claim.

“UBS told the retired couple that as a worst case scenario their principal investment would be protected,” said Chris Vernon, founder of Vernon Healy.  “In reality, the notes had no principal protection and were simply unsecured loans to Lehman, which were wrapped in a very complex structure, that helped conceal the lack of protection.”

Vernon Healy attorneys allege that UBS also misled the retired couple’s financial advisor by internally providing misleading and fraudulent marketing and training materials that erroneously described the notes as safe and principal protected, the claim states. UBS’s internal sales force was consistently and strongly encouraged to push  sales of Lehman structured products to main street investors while UBS was propping up Lehman with ultra-high interest loans, which demonstrated UBS’s knowledge of Lehman’s desperation and lack of liquidity, the claim asserts. 

At the onset of the Lehman bankruptcy, the Texas retirees joined thousands of other Lehman notes holders left standing at the back of the line with all unsecured creditors in the Lehman Brothers bankruptcy. According to the claim, UBS sold an estimated $1 billion in Lehman principal protected notes to main street investors. 

In addition to compensatory damages, Vernon Healy is seeking significant punitive damages on behalf of the Texas couple in light of UBS’s gross malfeasance, the claim states.

Vernon Healy has filed more than $12 million in Lehman notes arbitration claims on behalf of investors before the Financial Industry Regulatory Authority. The firm’s investigation of Lehman notes was featured in an AARP magazine article about the dangers of investing in so-called structured products, which have been increasingly pitched by brokerage firms to retirees as safe investments. Vernon Healy’s ongoing investigation continues to reveal numerous other concerns in relation to the sale of Lehman notes to retail investors that have not been addressed by FINRA or other regulators.

Structured products are extremely complex types of debt securities that include a derivative component and whose value at maturity is governed by arcane mathematical formulas, the claim states. 

For more information about Vernon Healy’s nationwide investigation of Lehman notes, visit lehmannotes.com.

The securities attorneys at Vernon Healy represent individuals and businesses nationwide in disputes involving all manner of financial fraud and negligence related to Lehman notes, structured products, non-traded REITs, hedge funds, fund of funds, bonds, mutual funds, annuities, tax shelters and other products.

Contact:
Chris Vernon
Vernon Healy
(239) 649-5390
www.vernonhealy.com
www.lehmannotes.com

Investors harmed by the Lehman Brothers bankruptcy get mixed messages this week

The Lehman Brothers bankruptcy that shook the financial world in 2008 still has investors who lost billions in the collapse wondering when they will begin to recoup their losses. Two decisions this week – one by a judge and the other by the Lehman Estate – did little to bring clarity to the situation or hope that investors will see a significant portion of their money anytime soon, say securities attorneys at Vernon Healy, the investor advocacy law firm.

In one development, a New York bankruptcy judge cleared the way for Neuberger Berman Group LLC to buy the 48 percent remaining equity interest in that company from Lehman Brothers Holdings Inc. over five years, generating about $1.5 billion.

In a second development, Lehman Brothers Holdings Inc. said it would take on billionaire Sam Zell's Equity Residential in a fight for control of Archstone, the company's largest real estate asset. After the Lehman collapse, the company owned 47 percent of Archstone and banks held the remaining 53 percent. But the banks sold half their holdings to Zell earlier this month, and Zell is seeking to buy their remaining 26.5 percent. Lehman Holdings will seek permission this week from a bankruptcy judge to exercise its option to match Zell’s offer with a $1.33 billion offer of its own.

While the Neuberger Berman deal injects a significant amount of cash into Lehman Holdings’ coffers, it appears the money is coming in over five years, meaning investors may see a trickle of cash versus a lump sum. Some estimates put the overall recovery for most investors in the 18 to 20 cents on the dollar range. If these estimates are correct, then investors may suffer an 80 percent or more loss of principal from products that UBS represented to be “principal protected.”

“UBS simply deceived my clients and thousands of other investors – as well as many UBS financial advisors – with respect to the principal protection in these products.  This deception was especially egregious given what UBS really knew about Lehman’s financial situation, including the Archstone purchase,” said securities attorney Chris Vernon of the Vernon Healy law firm.  

And the current Lehman contest with Zell over control of Archstone, while possibly viable for a healthy company is questionable in light of the bankruptcy, Vernon said.

“Lehman made a bad business decision in acquiring Archstone. Given the number of retail clients of UBS and other firms caught up in this bankruptcy as unsecured creditors,  Lehman should be focused on liquidating assets and distributing the proceeds to my clients and other unsecured creditors rather than extending the time that Lehman structured note investors have to wait to recoup what they can from the bankruptcy,” Vernon said. 

Christopher Vernon represents investor clients with more than $10 million in losses due to the Lehman Brothers bankruptcy. Vernon’s investigation into Lehman structured products has been featured in AARP magazine.

Contact for media inquiries.

Chris Vernon
Vernon Healy
239-649-5390
www.vernonhealy.com

UBS fraudulently hawked Lehman principal protected notes to clients,Vernon Healy investor claim states

Naples, Fla. — UBS fraudulently misrepresented Lehman principal protected notes in a heavy sales push to its brokerage firm clients at a time when it was systematically shedding its own Lehman debt behind the scenes in advance of the Lehman Brothers bankruptcy, according to a claim filed today by the nationwide investor advocacy law firm Vernon Healy.

Holders of Lehman notes have been left standing at the back of the line with unsecured creditors in the Lehman Brothers Bankruptcy despite the fact that UBS marketed the notes as safe and principal protected, according to the claim. UBS sold an estimated $1 billion in Lehman principal protected notes to main street investors who are now holding virtually worthless paper, according to the claim. 

Vernon Healy filed close to a half million in claims today on behalf of two UBS clients who assert that they were fraudulently sold Lehman structured products that UBS touted as safe and “principal protected.” The law firm has filed close to $12 million in Lehman notes arbitration claims on behalf of investors before the Financial Industry Regulatory Authority.

Vernon Healy’s investigation was featured in AARP magazine in an article about the dangers of investing in so-called structured products, which have been increasingly sold by brokerage firms to retirees in recent years as safe investments.
 
UBS provided misleading and fraudulent marketing and training material to its own sales force of financial advisors who were encouraged to push sales of Lehman structured products to main street investors, the claim states. Behind the scenes, UBS was propping up the financially faltering Lehman with loans and charging Lehman high interest rates, a situation that demonstrated Lehman’s desperation and poor credit worthiness, the claims assert. 

“As a creditor of Lehman, UBS was in a unique position to assess Lehman’s increasing financial difficulties.  However, despite its knowledge of Lehman’s financial situation, UBS failed to warn its financial advisors or its clients of the increasing risk posed by Lehman structured products,” a claim today filed by Vernon Healy on behalf of an investor states.

Vernon Healy is seeking significant punitive damages on behalf of investors in light of UBS’ gross malfeasance, the claim states. UBS made lucrative profits on its predatory lending strategy to a desperate Lehman at a time when it was making enormous profits on fees and commissions by deceptively selling mom-and-pop investors. UBS told these investors that as a worst case scenario their principal investment would be protected, the claims state.

For more information about Vernon Healy’s nationwide investigation of Lehman notes, see the firm’s web site lehmannotes.com

The securities attorneys at Vernon Healy represent individuals and businesses in disputes involving all manner of financial fraud and negligence including related to Lehman notes, structured products, non-traded REITs, hedge funds, fund of funds, bonds, mutual funds, annuities, tax shelters and other products.

For more information, contact:
Chris Vernon, attorney at law
Vernon Healy
(239) 649-5390
www.vernonhealy.com
www.lehmannotes.com

How do you know if you have a Reverse Convertible note – and why you should be concerned

Brokerage firms use a myriad of complex terms to describe the reverse convertible notes being hawked to retail investors. For example, UBS sells reverse convertibles under the name Yield Optimization Notes. Other firms that sell very similar products, use very different terms.

As a result, some investors are not aware that the structured note that they own is a reverse convertible note. Unfortunately, regardless of the fancy name provided to you by the brokerage firm, these are effectively sold as bond surrogates and, in reality, they are often rogue products that are not consistent with the best interest of the retail investor.   

While investors continue to fare well with FINRA arbitration claims against UBS for its overzealous sale of 100 percent principal protected notes and other structured products to fixed income investors, the Securities and Exchange Commission has been looking into the problematic and widespread sale of reverse convertibles to the same group of fixed income investors.

While selling unsecured promissory notes as 100 percent principal protected may have been the one of the most misleading product sales pitches to come along in a good while, the sale of reverse convertibles may be one of the most unsuitable and rogue product sales campaigns to come along in a good long while. 

The underlying concept for both principal protected notes and reverse convertibles is disturbing.  Specifically, in recommending the types of structured notes described above, your trusted financial advisor firm or wealth management firm is advising you, the client, to loan money to it – or one of its brethren on Wall Street – on an unsecured basis as the best investment idea for you.

Keep in mind that these same firms summarily fire individual financial advisors who borrow money from a client regardless of the return on the loan being offered to the client. Similarly, regulators such as FINRA, the Financial Industry Regulatory Authority, regularly investigate and punish individual financial advisors who borrow money from a client.   Thus, the very concept of a brokerage firm borrowing money from its own clients on a widespread basis highlights the firm’s willingness to disregard the massive conflict of interest embedded in these structured note products.    

Wall Street firms such as UBS – which use terms such as “Yield Optimization Notes” to refer to “reverse convertibles” – are preying on fixed income investors looking for low risk products with better returns than are now available from traditional fixed income products.

Similar to non-traded REITs, the sales pitch for structured notes focuses on the returns and downplays the risks and the conflicts of interest. In fact, last month the SEC examined the reverse convertible sales practices of more than ten broker-dealers and raised “suitability,” pricing, risk disclosure, and misrepresentation concerns about the firms’ sales and maintenance of reverse convertibles in client accounts.

These products are so complicated – they include an option-like component as part of the structure – that regulators have concerns that many individual financial advisors may not even fully understand the product they are recommending. Regarding the complexity, see FINRA regulatory notice 10-09. In fact, even the anemic FINRA regulators stated years ago that reverse convertibles should only be recommended to investors who are approved to do option trading.   NASD ( FINRA) Notice to Members 05-59.

If you are being pitched structured notes that are not FDIC insured, consider that the issuers and sales people are requesting your money to fund their own operations or operations of another big Wall Street firm. In other words, they have decided they would rather borrow money from you on an unsecured basis than borrow money from a bank or institutional lender. In our opinion, they aren’t doing this to provide you with a wonderful opportunity, but rather they’re doing it because the issuers and selling firms believe they can squeeze a better deal out of you than they can from a banker or professional lender.

As class actions relating to the sale of Lehman principal protected notes are winding their way through the system, Courts are also recognizing problems with the sales of structured notes.  For example, just last month, New York Federal Judge Lewis Kaplan stated the following in an opinion in one of the Lehman Brothers related class actions: 
“[The pricing supplements mention] 100% principal protection at least four times on the first page.  By contrast, the risk that investors could lose their principal if Lehman went bankrupt is not mentioned on that page at all.  The rest of each pricing supplement continues this trend, frequently mentioning principal protection, but rarely or obliquely disclosing the risk that Lehman would not repay.”

Reverse convertibles, like principal protected notes, will soon show that Wall Street firms are again pursuing their own greedy interests while failing to protect the interests of the investors they ask to trust them.

Chris Vernon, a founding partner of the Vernon Healy law firm, is an investor advocate who represents clients around the nation in securities fraud arbitration and financial litigation. Contact the Vernon Healy law firm at 239-649-5390.

 

SEC Warns Investors of the Dangers of Structured Products

Almost three years after the historic bankruptcy of Lehman Brothers, the Securities and Exchange Commission shows concerns that investors continue to be unaware of the potential risks of investing in structured products.

Just last month, the SEC issued a notice reminding investors to carefully review the terms, risks, fees, and other not-so-apparent disclosures before deciding whether to invest in structured products.

Structured products in general continue to be marketed as safe investments with attractive rates of return.  This sales pitch was invalidated when investors who purchased Lehman structured notes through UBS suffered dramatic losses in their portfolios as a result of these investments. 

The SEC warns in its regulatory pronouncement that even though these products often have reassuring names like “principal protection” or “absolute return,” investors could still stand to lose all of their money.  This is the case because structured notes are usually nothing more than unsecured loans to the issuer of the note and have the potential to lose all of their value if the issuer goes bankrupt. In other words, financial institutions effectively borrow money from Main Street investors with no collateral and on terms favorable to the borrower.  

But the problem is far more severe. Main Street investors are not only tricked into making unsecured loans to financial institutions; those institutions also charge investors hidden costs and fees in the process.  Put differently, it is like having somebody borrow money from you and then having that person charge you a fee for accepting your money. 

The SEC acknowledges that “even if the [structured notes] sales material suggests otherwise….structured notes can have hidden or imputed costs, which in some cases may be relatively high.” The SEC also recognizes that these costs generally “are not transparent to investors.”

Another component of the structured notes highlighted by the SEC in its regulatory pronouncement is the fact that in many instances, investors can find themselves tying up their principal for many years and during this time not receive any profit. Investors could bind their money “for upwards of a decade with the possibility of no profit on [their] initial investment….and, in the meantime, inflation could erode [the investors’] purchasing power.,” according to the SEC. 

This scenario continues to occur because structured products are just too complicated for ordinary investors to understand and evaluate and too profitable for Wall Street.  Furthermore, the potential return on structured products’ investments varies significantly based on the method the issuer uses to calculate gains or losses. Investors can find a useful illustration of one of these methods (shark fin payouts) in the SEC structured products warning.

In sum, structured products continue to be investment vehicles financial institutions utilize to get unsecured loans from Main Street investors; are packed with hidden fees and costs; and are designed in such a way that the odds are greatly stacked in favor of financial institutions. 

Vernon Healy is a Naples, Florida law firm that represents investors with more than $10 million in Lehman notes claims, including Yield Optimization and 100% Principal Protected Notes and has conducted an extensive nationwide investigation on structured products. Vernon Healy’s investigation of structured products was featured earlier this year in AARP Magazine. The attorneys at Vernon Healy collectively have more than 30 years of experience representing investors who are victims of stock fraud and stock losses due to misconduct. Vernon Healy securities attorneys are experienced in securities arbitration and assist clients in recovering losses caused by all manner of financial fraud and negligence.

For more information on whether you have a claim involving a structured product, contact the Vernon Healy law firm at 239-649-5390 or Toll Free at 877-649-5394 or email info@vernonhealy.com
.

Vernon Healy files an additional $1.1 million in Lehman note claims against UBS

Naples, Florida — Nationwide investor advocacy law firm Vernon Healy filed $1.1 million in securities fraud claims today against UBS for misconduct involving sales of Lehman structured products that promised investors “principal protection” but left them with virtually worthless investments.

In the past week, Vernon Healy has filed more than $2 million in claims against UBS on behalf of investor victims from Tennessee, Texas, Maryland, Pennsylvania, Missouri and  Florida.

All but one of the investors for which Vernon Healy is filing claims today are retired; They include a retired newspaper advertising manager, a retired printing company employee, a retired chemical technician, a widowed homemaker and farm owner, a retired teacher, a surgeon and a CPA.

The nationwide $2.5 million fine and $8.25 million restitution order issued by the industry-sponsored Financial Industry Regulatory Authority against UBS in April won’t assist any of the victims on behalf of whom Vernon Healy is filing $1.1 million in claims against UBS today.

Attorney and founding partner Chris Vernon has blasted FINRA’s action against UBS as paltry and inadequate.  

Vernon Healy represents investors with close to $11 million in Lehman structured product losses.

“Despite a public outcry in the wake of egregious misconduct by Wall Street brokerage firms during the financial crisis, we’ve seen lapdog responses from federal regulators,” Vernon said. “Investors need aggressive regulatory watchdogs that are willing to send a message that securities fraud won’t be tolerated in the future.”

UBS (NYSE: UBS) designed these Lehman structured products and marketed them to its customers as safe and 100 percent “principal protected” even though in reality, the principal protected notes were essentially unsecured loans to now-bankrupt Lehman Brothers, the claims state.

UBS was in a unique position to know of Lehman’s precarious financial position and in fact UBS engaged in predatory lending tactics in which it loaned Lehman money behind the scenes to prop up the failing firm, according to the claims.  However, while UBS took steps to protect itself from a Lehman collapse in these “Repo 105” deals, UBS left its own customers totally exposed to the consequences of a Lehman failure and effectively lied and assured them that in a worst case scenario their principal investment was protected, according to the claims.  

Vernon Healy’s investigation, which has been spotlighted in an AARP Magazine article, has found that UBS was distributing misleading material to its own financial advisors.

In one of the cases filed today, the broker concentrated more than 50 percent of the investor’s account in a single industry and 37.5 percent of the investor’s account in a single issuer, Lehman Brothers. 

“UBS compliance and supervision apparently used the ‘principal protected’ label as an excuse to ignore concentration problems in customer accounts like (that of the investor),” the claim states. “The required industry procedures that protect a customer from the risk associated with such an extreme concentration were completely disregarded in this case.”

The securities attorneys at the Vernon Healy collectively have more than 30 years of experience representing investors who are victims of securities fraud and all manner of financial negligence. Based in Naples, Florida, Vernon Healy has conducted aggressive nationwide investigations of structured products, reverse convertibles, fixed income products, bond funds, hedge funds, non-traded reits, and various securities fraud cases and Ponzi schemes.

Vernon Healy and the Carrigan law firm file $1 million in securities fraud claims against UBS for Lehman principal protected note conduct in Texas state court

Houston, Texas — Attorneys for investors have filed $1 million in securities fraud charges in Texas state court against UBS in an effort to force UBS to answer for its Lehman principal protected note sales in a public court case versus private industry-sponsored arbitration.

Trial lawyer Stephen Carrigan, who has hired nationwide investor protection law firm Vernon Healy as co-counsel, is pursuing two lawsuits in Texas state court where UBS may have to defend its conduct in a public venue versus the secret industry-sponsored arbitration forum run by FINRA, the Financial Industry Regulatory Authority. FINRA proceedings are often closed to the public and case documents typically aren’t public record during the proceedings.

“The closed door FINRA proceedings have allowed UBS to hide some of its most egregious conduct from public view and public accountability,” attorney Carrigan said. “We want UBS to answer for its conduct in a public court case before a public jury.”

Arbitrators have repeatedly sided with investors and against UBS in FINRA arbitration in cases involving Lehman principal protected notes that were pitched and sold to investors as safe and 100 percent principal protected. The suits — one filed in Nueces County, Texas and the other filed in Harris County, Texas — call upon a jury to impose significant punitive damages against UBS.

“FINRA has only imposed very limited monetary sanctions as a result of finding gross misconduct, and as a result the monetary sanctions are incredibly inadequate in light of the enormous profits UBS obtained by taking advantage of Lehman’s financial troubles to engage in a tremendously lucrative predatory lending strategy while simultaneously earning fees and commissions from the Lehman products it sold to its customers without disclosing the risks,” one of the lawsuits claims. “Very significant punitive damages are appropriate in light of UBS’ gross malfeasance in this case.”

Carrigan is also the Plaintiff in one of the lawsuits filed against UBS on May 14, 2011. The suit claims a broker sold him $750,000 in Lehman principal protected notes and repeatedly, in essence said “there was no downside risk in these notes and that the worst possible case was the Plaintiffs would break even and receive a 100 percent guaranteed return of their investment,” the lawsuit claims.

UBS (NYSE: UBS) designed the Lehman structured product and marketed it to its customers as safe and 100 percent “principal protected” even though in reality, the principal protected notes were essentially an unsecured loan to now-bankrupt Lehman Brothers.

These UBS-designed investment products supplied Lehman Brothers (LEHMQ.PK) with an infusion of unsecured loans from main street investors as Lehman Brothers’ solvency became a concern, according to the claim. The Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing essentially at the back of the line as unsecured creditors.

In the second lawsuit, the broker sold a Texas investor $300,000 worth of Lehman principal protected notes. After the Lehman bankruptcy, the investor saw the value of the notes drop to zero on his monthly account statement, the lawsuit states. Initially, the broker told the investor it was just “an accounting error” but later the broker said UBS would make its clients whole, which didn’t happen.

In April, FINRA hit UBS with a $2.5 million misconduct fine for its sales practices with respect to Lehman structured products. Following the announcement, investor rights attorney Christopher Vernon blasted the action as inadequate, saying: “FINRA, Wall Street’s self-regulatory organization, has handed one of its own a paltry fine for gross misconduct and deception of investors.”

The Vernon Healy law firm and its advocacy on behalf of Lehman note investors was recently featured in a March 2011 AARP Magazine article “The Time Bomb in Your Nest Egg” discussing the dangers of investing in structured products. Vernon Healy, based in Naples, Florida, represents investor victims with Lehman note losses in excess of $10 million.

For more information contact:

Christopher Vernon
Vernon Healy, attorneys at law
999 Vanderbilt Beach Road, Suite 200
Naples, Florida 34109
239-649-5390
877-649-5394
info@vernonhealy.com
vernonhealy.com
lehmannotes.com

Vernon Healy: FINRA fine of UBS for Lehman notes deception is woefully weak

The investor advocacy law firm of Vernon Healy, which represents Lehman principal protected notes investors around the nation, called the $2.5 million fine issued against UBS today by Wall Street’s self regulatory organization a disturbingly small amount.

FINRA, the Financial Industry regulatory Authority, fined UBS $2.5 million and ordered that the brokerage firm pay $8.25 million in restitution to UBS clients who purchased Lehman principal protected notes.

“I’m disturbed by the small size of the fine,” said Chris Vernon, who represents investor victims with more than $10 million in Lehman note losses. “FINRA, Wall Street’s self-regulatory organization, has handed one of its own a paltry fine for gross misconduct and deception of investors.”

Arbitration panels have repeatedly sided with investors against UBS in cases involving Lehman principal protected notes and other Lehman structured products. Although FINRA’s action helps investors who are pursuing claims, it comes after considerable time has lapsed, Vernon said.

“How long does it take FINRA to act?” said Vernon, who began filings cases on behalf of investors against UBS involving Lehman principal protected notes more than 2 years ago. More than a year ago, Vernon Healy detailed malfeasance by UBS during the months leading up to the Lehman bankruptcy which is also the focus of the FINRA investigation.

UBS disregarded a series of red flags that warned of the looming Lehman collapse, such as the company’s Repo 105 transactions and its Archstone REIT deal that was a disaster for Lehman, according to claims filed by Vernon Healy.

Investors who bought Lehman principal protected notes were told just that — that their principal was protected. But when Lehman collapsed and filed bankruptcy in September 2008, these investors lost virtually all their principal, according to claims filed by Vernon Healy.  

FINRA’s restitution order does not prevent customers from either pursuing their pending arbitration claims against UBS or from filing new arbitration claims, according to Vernon Healy.  What the agreement between FINRA and UBS does is to set the “floor” for claims filed by customers who purchased “100% principal protected” structured notes issued by Lehman Brothers during the relevant period and who meet the other criteria set forth by FINRA.

Those customers who pursue their claims in arbitration will recover at least the restitution amount in arbitration and may recover damages well in excess of that amount, depending on the facts of their individual cases and the findings of their arbitration panels, Vernon Healy believes.

Vernon Healy's investigation reveals that the same supervision lapses, unsuitable sales and misleading marketing and sales techniques that FINRA found also occurred in connection with many of UBS’s other structured product sales.

Written material obtained by Vernon Healy as part of its investigation more than a year ago showed that UBS disseminated misleading product descriptions to its financial advisors that portrayed the Lehman notes as investments that put none of the investor’s principal at risk, according to multiple claims filed against UBS by Vernon Healy.

These UBS-designed investment products supplied Lehman Brothers with an infusion of unsecured loans from main street investors as Lehman Brothers’ solvency became a concern, according to claims filed by Vernon Healy. The Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing essentially at the back of the line as unsecured creditors.

When pitching these structured products after the March 2008 collapse of Bear Sterns and through the summer of 2008, UBS omitted telling their own financial advisors and their clients that Lehman was on the brink of insolvency, according to claims filed by Vernon Healy.

The Vernon Healy law firm and its advocacy on behalf of Lehman note investors was recently featured in a March 2011 AARP Magazine article “The Time Bomb in Your Nest Egg” discussing the dangers of investing in structured products. The story told of a 55-year-old restaurant owner represented by Vernon Healy who was sold $130,000 in Lehman “principal protected notes” and other structured products that lost virtually all their value and also of a Michigan family represented by Vernon Healy that lost $275,000 on Lehman notes and other structured products sold by UBS.

The securities attorneys at Vernon Healy collectively have more than 30 years of experience representing investors who are victims of securities fraud and all manner of financial fraud and negligence.

For more information,
Contact Chris Vernon
cvernon@vernonhealy.com
(239) 649-5390

www.vernonhealy.com
www.lehmannotes.com

Vernon Healy securities fraud attorneys file another half million in Principal Protected note claims against UBS

NAPLES -- The investor advocacy legal team at Vernon Healy, in conjunction with Orlando, Florida attorney Neal Blaher, filed more than half a million dollars in claims today against UBS, alleging the Wall Street firm committed securities fraud when it  created and sold investment products such a Lehman notes as well as its own in-house “principal protected” structured products to Main Street investors.

Among those seeking FINRA arbitration in the claims are a retired telecommunications executive, a couple who owned a construction business, a fundraiser for non-profit organizations and a retired dental assistant, according to the claims filed today before FINRA, the Financial Industry Regulatory Authority. The claims seek compensatory and punitive damages against UBS (NYSE:UBS).

The Vernon Healy legal team represents investors with more than $10 million in brokerage fraud claims against UBS related to structured products, principal protected notes and reverse convertibles – referred to as “Yield Optimization Notes” by UBS.

UBS hawked these unsuitable products to risk averse investors and assured them that “principal protected” meant their core investment was safe, according to the claims filed today.

Written material obtained by Vernon Healy as part of its pre-filing investigation shows that UBS disseminated misleading product descriptions to its financial advisors that portrayed the Lehman notes as investments that put none of the investor’s principal at risk, according to the claims.

But the truth of what these investors experienced flies in the face of any principal protection that exists with any promissory note, the claims allege. Ignoring its fiduciary duty to these investors, UBS disregarded a series of red flags that warned of the looming Lehman collapse, such as the company’s Repo 105 transactions and its Archstone REIT, or Real Estate Investment Trust, deal that was a disaster for Lehman, according to the claims.

UBS worked to shore up the failing Lehman Brothers with non-collateralized loans from its own client base of retail investors, while making a handsome profit from its own dealings with Lehman, the claims state. For much of the time that UBS was convincing its clients to loan money to Lehman through Lehman principal protected notes and other structured products, UBS itself was loaning money to Lehman on safer and far more profitable terms than the structured note loans, the claims say. UBS was able to negotiate these favorable loans for its own benefit because it was well aware of and taking advantage of Lehman’s desperate financial situation, the claims allege.

“The Lehman collapse that UBS clearly saw coming left the investors in the claims filed today as well as many others holding nearly worthless investment products and standing at the back of the line of Lehman’s creditors,” Vernon said. “FINRA arbitration panels are recognizing the gross misconduct perpetrated by UBS and frequently are siding with investors.” 

Vernon Healy is a Naples, Florida law firm that represents UBS investors in Florida and multiple other states in the U.S.  Vernon Healy’s ongoing investigation of Lehman structured note sales in the United States has expanded to sales of Lehman structured notes in Europe and South America as well as other structured products sold, such as “reverse convertibles.”  AARP Magazine recently featured Vernon Healy’s Lehman principal protected notes investigation in an article warning retirees about the dangers of structured products.

The attorneys at Vernon Healy collectively have more than 30 years of experience representing investors who are victims of stock fraud and stock losses due to misconduct. Vernon Healy securities attorneys are experienced in securities arbitration and assist clients in recovering losses caused by all manner of financial fraud and negligence.

Contact
Vernon Healy
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
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