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

Lehman notes and bonds hurting local governments

The Lehman Brothers bankruptcy more than a year ago is old news to most Americans, but aftershocks from the largest bankruptcy in history continue to affect local governments across the country. Municipalities that tried to avoid risk by buying highly rated Lehman products now find themselves holding products that are now nearly worthless, according to the Wall Street Journal.

The casualties – dozens of school districts, cities and counties – lost more than $1.7 billion in the Lehman collapse. And for them, the pain from those losses continues.

Nowhere is that more true than in San Mateo, Calif., a municipality of 735,000 residents near San Francisco that saw the largest loss from the bankruptcy. Following the September 2008 collapse of Lehman Brothers, San Mateo saw $155 million vanish, the Wall Street Journal reported.

According to the Journal:

The county’s investment pool had purchased highly rated Lehman bonds and Lehman notes, but these are now trading at roughly 20 cents on the dollar. Making matters worse, the loss caused by Lehman Brothers’ collapse came on the heels of deep budget cuts at the state level that had been brought by California’s financial woes.

The one two punch meant plans for capital investments for San Mateo’s schools, community colleges and the county were scrapped. Teachers have been laid off and the county has scaled back its commuter rail service. For the first time in its history, San Mateo will have mass layoffs this spring, cutting hundreds of jobs.

The sad thing about San Mateo is that it is not an isolated case. Municipalities across the country have suffered similar fates but have seen no sign of relief from the government.

Local government leaders who sought a share of TARP funds were granted concessions in the writing of the bill but so far have seen no money. President Obama’s Treasury Secretary Timothy Geithner has refused to release TARP funds to make municipalities whole. Treasury officials say the request, while well intentioned, would lead to a flood of such requests from other investors.

Vernon Healy is representing investors with large Lehman losses on structured products and Lehman principal protected notes in FINRA arbitration. As the Wall Street Journal article shows, it’s not only individual investors who’ve been hurt by Lehman products but also local government taxpayers.

For more information, contact
Vernon Healy
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
http://www.vernonhealy.com
http://www.lehmannotes.com
(239) 649-5390
Toll Free: (877) 649-5394

email: info@vernonhealy.com

Vernon Healy files $1 million Lehman Principal Protected Notes claim against UBS on behalf of Texas investor

Naples, Florida – UBS committed gross malfeasance when it marketed and sold $1 million in Lehman principal protected notes to a retired executive that may now be virtually worthless, according to a claim filed today by the Vernon Healy investor advocacy law firm that seeks compensatory and punitive damages against UBS.

Written material obtained by Vernon Healy as part of its pre-filing investigation shows that UBS (UBS) disseminated misleading product descriptions to its financial advisors that portrayed the Lehman notes as safe investments with 100 percent of the investor’s principal protected and none at risk, according to the claim filed today on behalf of a Texas investor.

Actually, the notes were a highly complex product designed by UBS that carried significant credit risk, the claim states.

These UBS-designed investment products supplied Lehman Brothers with an infusion of unsecured loans from main street investors as the housing market decline and credit crisis threatened Lehman Brothers’ solvency, according to the claim. The Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing in line as unsecured creditors.

As the architect of these Lehman structured products, UBS knew or should have known of Lehman’s precarious financial position, but UBS urged its financial advisors through internal “road shows” to pitch Lehman principal protected notes as safe and principal protected to their clients, according to the claim.  

State securities regulators in New Hampshire have taken action against UBS for deceptive practices involving the notes, so-called Lehman Brothers Asian Currency Basket Principal Protected Notes, that were the very same product sold to Vernon Healy’s Texas client filing today’s claim.  

The Vernon Healy law firm is representing multiple Lehman Brothers principal protected notes investors in multiple states — most of whom have losses well in excess of $500,000 — in cases against UBS.  Vernon Healy is also investigating the sale of these Lehman structured products by the Florida-based brokerage firm Raymond James.

Since launching its investigation more than a year ago, investors from all over the world — particularly from Europe  — have sought information about Lehman notes through Vernon Healy. Many of these international investors were pitched these Lehman structured notes by affiliates of Credit Suisse or Citi Bank as well as UBS.

Vernon Healy is a Naples, Florida based law firm that is representing multiple Lehman structured product investors in FINRA arbitration. Vernon Healy represents investors who are victims of stock fraud and stock losses due to broker fraud and brokerage firm fraud and misconduct. Vernon Healy securities attorneys are experienced in arbitration and litigation. The firm assists clients in recovering losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

For more information, contact
Vernon Healy
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
http://www.vernonhealy.com
http://www.lehmannotes.com
(239) 649-5390
Toll Free: (877) 649-5394

email: info@vernonhealy.com

Vernon Healy files Lehman Principal Protected Notes claim against UBS on behalf of Naples surgery assistant

Naples – UBS was negligent in its handling of a Naples surgery assistant’s retirement nest egg when brokers from the firm recommended risky investment products such as Lehman notes while failing to reveal the true level of credit risk, according to a claim filed today by the Vernon Healy Law Firm.

Despite being reassured by her broker at the UBS office in Bonita Springs that the principal of her investment was safe and, according to firm literature, the structured products were subject to “rigorous ongoing due diligence,” the 49-year-old hospital worker, lost almost $60,000 of her retirement savings.  She ended up with a retirement account that consisted entirely of auction rate securities and structured products, including now virtually worthless Lehman Brothers structured notes, according to the claim.

The Lehman structured notes, a complex investment product designed by UBS, are difficult to understand but nonetheless were pushed to the client even though she instructed her UBS financial advisors to set extremely conservative goals and target principal protected investments.

Vernon Healy’s client did her best to protect herself from investments that might threaten her retirement nest egg and balked at initial recommendations from her UBS brokers that seemed too risky, according to the claim. Instead, she instructed her UBS broker to “park” her money until she decided a direction. The broker then recommended and bought the risky auction rate securities and structured notes.

UBS paid more than $22 billion in a December 2008 settlement to repurchase the auction rate securities from investors such as Vernon Healy’s client. But the firm remains responsible for its reckless advice that landed her with nearly $200,000 in risky structured products.

UBS is complicit in this grossly negligent advice and marketing to Vernon Healy’s client because it failed to warn brokers about the growing risk of structured products, the claim states. UBS strayed from its mission to put the investor’s needs above its own by failing to point out the riskiness of these investments.

The firm went so far as to hold trainings during which it encouraged brokers to aggressively market the structured products despite numerous red flags related to the credit crisis and the housing market meltdown. Despite these warning signs, UBS continued to promote and sell Lehman structured products to its customers, including Vernon Healy’s client.

The terms “principal protected” and “guaranteed return of principal” were used in the marketing of structured products because, when combined with the excessive complexity of the coupon payment formulas, they were effective at obscuring the substantial credit risk in the products.  Because principal protected notes purported to guarantee principal, they were easy to market to investors seeking low risk investments, the claim states.

"Principal protection" means nothing if the note issuers are unable to meet their obligations.  Structured product investors essentially made unsecured loans to different issuing banks, including the now bankrupt Lehman Brothers.

By late February 2008, when UBS sold Lehman structured notes to Vernon Healy’s client, UBS was well aware of the effect of the credit crisis on the financial sector in general and Lehman in particular, according to the claim.

Lehman’s 2007 fourth quarter earnings were down; the credit market crisis caused staggering total write-downs of $3.5 billion during the quarter with more write-downs expected.  Faced with increasing borrowing costs in 2007, Lehman stepped up its issuance of structured products because it was in desperate need of raising funds in order to maintain liquidity. 

Securities attorneys Chris Vernon and Susan Healy represent numerous Lehman notes investors in multiple states and have received international media attention for the firm’s Lehman notes investigation. Today’s claim comes on the same day the firm filed a claim on behalf of a Texas executive who lost $1 million on Lehman principal protected notes that are now virtually worthless.

Vernon Healy is a Naples, Florida based law firm that represents investors who are victims of stock fraud and stock losses due to broker fraud and brokerage fraud. Vernon Healy attorneys are experienced in securities arbitration and litigation. The firm is currently representing multiple Lehman structured product investors in FINRA arbitration.

The firm assists clients in recovering losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

For more information, contact:
Susan Healy, attorney at law
Christopher T. Vernon, attorney at law
http://www.vernonhealy.com
http://www.protectinginvestors.com
 
(239) 649-5390
Toll Free: (877) 649-5394
email:  info@vernonhealy.com