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

ARS and Lehman Brothers Principal Protected Notes sales pushed by UBS: A double dose of disgust

Vernon Healy’s ongoing investigation of the sale of Lehman Brothers structured notes by UBS is turning up evidence consistent with the allegations of wrongdoing made by New Hampshire securities regulators against UBS.

The Vernon Healy investigation and the claim from securities regulators reveal a pattern of behavior by UBS that shows that the firm aggressively marketed Lehman Brothers principal protected notes and other Lehman structured notes to its own clients despite Lehman Brothers’ precarious financial position.  In one of the claims filed so far this year by Vernon Healy, the law firm alleges that UBS committed similar misconduct involving both auction rate securities and structured notes, including Lehman structured notes, much to the misfortune of main street investors.

Vernon Healy filed the claim on behalf of a surgery assistant who experienced mishandling of her retirement nest egg when UBS built her a retirement account that consisted of auction rate securities and structured notes backed by the financial sector.

Vernon Healy does not believe this is a unique situation within the UBS system.

“This double whammy of it coming to light that UBS misled investors about auction rate securities and soon thereafter coming to light that UBS also misled investors about structured notes has created a sense that UBS has effectively betrayed both its clients and undercut the credibility of its own financial advisors — some of whom have now left the firm in disgust,” investor rights attorney Chris Vernon said.

The Vernon Healy claim on behalf of the investor described above alleges that UBS urged the investor to buy auction rate securities after UBS already knew that the auction rate securities market was deteriorating and similarly urged the investor to buy Lehman and other structured notes from the financial industry after it knew that Lehman and the financial industry were having problems. 

The claim filed by New Hampshire securities regulators alleges something similar. In that filing, regulators accuse UBS of failing to warn investors about the potential risks of its structured investment products once Lehman Brothers began to experience financial problems.

Vernon Healy, based in Naples, Florida, represents investors nationwide who are victims of stock fraud and stock losses due to negligence and misconduct. Vernon Healy securities attorneys are experienced in complex financial litigation, including FINRA arbitration. The firm is currently representing multiple Lehman structured product investors in FINRA arbitration.

Investor wins again in Lehman note arbitration case against UBS

Lehman structured note investors have reason to celebrate again. With the latest Financial Industry Regulatory Authority (FINRA) arbitration ruling announced last week, UBS customers who lost money on Lehman Brothers principal protected notes are now five for five, with the decisions going against UBS and in favor of the customers in every reported case.

In the latest reported arbitration award, the FINRA panel awarded more than $400,000 and to a pair of investors who bought Lehman Brothers structured notes, including principal protected notes, from UBS in early 2008.

These notes were among $1 billion worth of Lehman products that UBS sold to U.S. investors, according to a UBS statement to Bloomberg.

Other brokerages, including Raymond James and Credit Suisse, also pushed Lehman structured products to their clients.  The products are now virtually worthless following the Lehman bankruptcy in September 2008.

This FINRA ruling and growing number of big and small investors lining up to recover losses from UBS underscores the gross negligence UBS demonstrated when it pushed the now nearly worthless Lehman structured products on unwitting investors. It also reveals the growing momentum for those wronged investors who choose to seek legal counsel in attempting to recover their losses from UBS.

Vernon Healy began filing claims against UBS on behalf of investors in early 2009 and has filed almost $2 million in Lehman note arbitration claims against UBS on behalf of investors in the past 2 months alone.

A significant number of individual investors represented by Vernon Healy have had Lehman principal protected note losses in excess of $500,000. The international media have recognized Vernon Healy’s investigative efforts involving Lehman notes and individuals from overseas, especially from the U.K., are contacting Vernon Healy to assist them in pursuing UBS in connection with the sale of Lehman structured notes in Europe.

Based on the investigation by Vernon Healy, it appears that UBS even misled its own financial advisors regarding the safety of the Structured Notes, including the Lehman Principal Protected Notes, that UBS so heavily promoted.

Vernon Healy is currently representing multiple Lehman structured product investors in FINRA arbitration.

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

Lehman Bankruptcy Examiner's Report is more evidence that UBS wronged structured products investors

By Chris Vernon

The 2,200 page Lehman Bankruptcy Examiner’s Report issued in March is another nail in the UBS coffin in FINRA arbitrations involving Lehman principal protected notes and other Lehman structured notes. Although the Lehman Report deals with a lot of complex transactions and related terminology such as “counterparties” and “Repo 105,” at its core, it reveals additional wrongdoing by UBS that is both simple and disturbing.

Specifically, the Lehman Bankruptcy Report reveals that for much of the time that UBS was convincing its own clients to loan money to Lehman through Lehman principal protected notes and other structured products, UBS itself was loaning money to Lehman on far safer and far more profitable terms than the structured note loans.¹ 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.

As revealed by the Lehman Report, UBS acted as a “counterparty” to the now infamous “Repo 105” transactions. Effectively, by acting as a “counterparty” to the “Repo 105” transactions, UBS was making high interest loans to Lehman on a collateralized and very short term basis.² These loans kept Lehman’s toxic assets off the books just long enough for the company to pay off some debt, issue rosier quarterly reports in late 2007 and early 2008³ and then borrow more money to buy back the toxic assets.

Acting as counterparty, UBS was making a lot of money from loaning money to Lehman despite the fact that the loans by UBS to Lehman were short term and despite the fact that UBS received collateral to repay the loan in the event that Lehman defaulted. This arrangement is in stark contrast to the much longer term loans that UBS was simultaneously recommending that its own clients make to Lehman on a completely unsecured basis through Lehman structured notes.

UBS’s recent public statement that the Lehman Bankruptcy Report does not show that the “counterparties acted inappropriately” both highlights and misses the point in the context of UBS clients who were sold Lehman structured notes such as the Lehman principal protected notes. In contrast to the UBS public statement, the Lehman Bankruptcy Report is significant additional evidence that may lead FINRA arbitration panels to award punitive damages in favor of former UBS clients who bring claims against UBS relating to Lehman structured notes.

How outrageous was UBS’s behavior?  While still selling Lehman structured notes to investors who have retained our firm and many others in March of 2008, UBS charged the now “desperate” Lehman a fee of $186 million on a very short term and fully collateralized multi-billion dollar loan. If this short term loan return were annualized, it would equate to a return to UBS of more than 150 percent on the loan. As one of Lehman’s own employees said in early 2008, “Everyone knows 105 is an off balance sheet mechanism so counterparties are looking for ridiculous levels” to try to squeeze Lehman.

The Vernon Healy Law Firm is now investigating whether UBS decided at some point that Lehman was in such bad shape that it should scale back on the “Repo 105” loans even though they were collateralized, short term, and lucrative. If such a scale back occurred, then an issue will be whether UBS took any similar action in 2008 to inform or protect its own structured note clients in connection with their exposure as lenders to Lehman.

Prior to the release of the 2,200 page Lehman Bankruptcy Examiner’s report in March 2010, UBS had already lost multiple FINRA arbitrations related to Lehman structured notes. Therefore, the information disclosed by the Lehman Bankruptcy report builds on an already troubling trail of Lehman red flags that were ignored by UBS, such as: Lehman’s status as the lowest rated of the investment banks;  Lehman’s Archstone deal that was a disaster for the company⁴;  Lehman’s illiquid balance sheet assets that rose 300 percent from 2006 to the first quarter of 2008⁵;  Lehman’s underwriting of more mortgage-backed securities in 2007 than any other firm, resulting  in a staggering percentage of Lehman’s overall equity being tied up in risky assets; and dramatic write-downs by Lehman.

A cross section of Vernon Healy’s clients with Lehman structured note claims, including baby boomers, a teacher, a hospital employee, wealthy retirees, and a charitable foundation reveals how aggressively and indiscriminately that UBS was selling Lehman Structured notes as late as late March 2008 — after the Bear Stearns melt down that rocked Wall Street and ignited panic among Wall Street insiders. This indiscriminate sale is further evidenced by the fact that individuals from overseas, especially the U.K. are now seeking to retain Vernon Healy to assist them in pursuing UBS in connection with the sale of Lehman Structured Notes.

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

¹ Volume 3, page 880 footnote 3382 of the Examiners report.
² Id. at 976
³ Id. at 875
⁴ Id. at 836
⁵ Id. at 836

Vernon Healy files $800,000 investor claim against UBS alleging deceptive sales of Lehman notes

The Vernon Healy investor advocacy law firm filed an $800,000 claim today against UBS and accused the brokerage of committing gross misconduct when it marketed and sold $800,000 worth of Lehman principal protected notes to a Houston businessman as a safe and conservative “principal protected” investment in November 2007.

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, according to the Vernon Healy claim filed today. 

The claim, filed before FINRA, the Financial Industry Regulatory Authority, seeks compensatory and punitive damages against UBS on behalf of the investor. The Vernon Healy law firm has filed almost $2 million in claims against UBS on behalf of Lehman note investors in the past month alone.

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.

After Lehman declared bankruptcy, the Texas investor received his October 2008 monthly statement, which dropped the value of the investment from $818,000 to zero, the claim states. This complete loss of valuation was contrary to the representation by UBS that the structured product was “principal protected,” according to the claim.

As the architect of these particular Lehman structured products, UBS knew or should have known of Lehman’s precarious financial position, but UBS urged its financial advisors to sell Lehman principal protected notes as safe to their clients, according to the claim.

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, today’s claim states.

State securities regulators in New Hampshire have taken action against UBS for deceptive practices involving Lehman Brothers Asian Currency Basket Principal Protected Notes, the same product sold to the Texas investor filing today’s claim. 

International investors, particularly from the UK, were pitched Lehman structured notes by affiliates of Credit Suisse, Citi Bank and UBS.

Vernon Healy is a Naples, Florida law firm that 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 securities arbitration and business litigation and assist clients in recovering losses caused by all manner of financial fraud and negligence.

Contact

Christopher T. Vernon, attorney at law

Susan R. Healy, attorney at law

(239) 649-5390
Toll Free: (877) 649-5394
email: info@vernonhealy.com


   

New Hampshire case against UBS involves same Lehman structured products as $1 million Lehman notes claim filed by Vernon Healy

A civil complaint filed in New Hampshire in 2009 involves the same sort of Lehman Brothers investment that is the subject of a $1 million claim filed in February by Vernon Healy.

Vernon Healy filed the claim on behalf of a Texas investor, a retired executive to whom UBS (NYSE: UBS) marketed and sold $1 million in Lehman Brothers principal protected notes. These notes were part of a Lehman Brothers’ so-called Asian Currency Basket Principal Protected Notes structured product. 

Vernon Healy alleges that UBS committed gross malfeasance by representing these notes as safe, with 100 percent of the investor’s principal protected. In fact, the investment was a highly complex product designed by UBS that carried significant credit risk.

This deceptive practice is similar to what the New Hampshire securities regulators accused UBS of in June. According to the New Hampshire Bureau of Securities Regulation, UBS sold investors the same Asian Currency Basket notes and portrayed the securities as safe.

New Hampshire regulators further allege that UBS failed to caution investors about the potential risks of the Lehman Brothers structured products once Lehman Brothers began to experience financial problems.

“UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions. The safety of these products was exaggerated. We believe UBS engaged in unfair and unlawful sales practices when presenting these investments,” Jeff Spill, Deputy Director of Securities Regulation Enforcement, said in a statement when announcing New Hampshire’s case against UBS in June. 

With the September 2008 bankruptcy of Lehman Brothers, many who invested in the company’s principal protected notes are likely to lose the majority of their investments. The Lehman Brothers bankruptcy is the largest such collapse in United States history, with more than $600 billion in debt.

According to Vernon Healy’s February claim, UBS was one of the architects of these Lehman Brothers structured products, and thus knew or should have known of Lehman Brothers’ troubled financial position. Yet UBS encouraged its financial advisors through internal “road shows” to pitch Lehman Brothers principal protected notes to their clients.

These UBS-engineered investment products served to infuse Lehman Brothers with unsecured loans from main street investors, even as the housing market declined and the credit crisis threatened Lehman Brothers’ solvency, according the Vernon Healy claim.

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

Since Vernon Healy launched its investigation almost 18 months ago, investors from around the world, especially in the UK and elsewhere in Europe, have approached the firm for information about Lehman notes. Many of these international investors were pitched 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 securities attorneys represent investors who are victims of stock fraud and stock losses due to broker fraud and brokerage firm fraud and misconduct. The firm assists clients in attempting to recover 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.

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

 

Investors’ with high-dollar Lehman principal protected notes losses applaud FINRA arbitration award

News that a FINRA arbitration panel has sided with an investor who lost more than $200,000 on Lehman Brothers principal protected notes came as a welcome signal to other investors with high-dollar losses who are pursuing claims against brokerage firm UBS.

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.

UBS pitched Lehman notes as “safe” investments in which investors’ principal investment would be protected from losses, even after warning signs surrounding Lehman’s faltering financial outlook had already begun to surface within securities industry circles that included UBS, according to Vernon Healy’s investigation.

The so-called “principal protected” notes as well as other structured notes promoted by UBS, were in fact risky, unsecured loans to Lehman Brothers, according to multiple claims filed by Vernon Healy on behalf of investors.   These risks were realized when Lehman Brothers’ bankruptcy in September 2008 left holders of Lehman notes and other Lehman structured products standing at the back of the line with other unsecured creditors.

Although other firms such as Raymond James pitched some of these same products in the Southeast, UBS was the primary firm pushing Lehman principal protected notes (also called PPNs) to retail investor clients in the U.S., many of whom were baby boomers and retirees looking for safety. 

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

Investor rights attorneys Chris Vernon and Susan Healy have received international media attention for the Naples, Florida based firm’s Lehman notes investigation.

The Wall Street Journal reported Friday that an arbitration panel of the Financial Industry Regulatory Authority ordered UBS to pay a Lehman notes investor two-thirds of the investor’s “principal” invested in a Lehman principal protected note, plus attorneys fees and interest. The total award was $200,000.

The panel held UBS accountable for misleading the investor.

In the past, complex and risky structured products were primarily sold to institutional investors. But more and more, brokerage firms began pushing these products on retail customers.

FINRA regulators warned brokerage firms to refrain from engaging in deceptive marketing of principal protected notes and other structured products in 2005. Wall Street firms like UBS were already on notice to refrain from engaging in fraud and deception regarding structured products.

For more information, contact
Chris Vernon at 239-649-5390 or contact Mr. Vernon’s assistant Andrea Costanzo at acostanzo@vernonhealy.com.

Investors around the globe still living a Lehman Brothers nightmare

Just over a year ago, investors first faced the waking nightmare of 150-year-old global finance giant Lehman Brothers making the largest bankruptcy filing in U.S. history. It was the first domino to fall in the chain of events that gave rise to a worldwide recession.

A year later, the fallout from the bankruptcy continues around the globe. While investors, including ones represented by Vernon Healy, are in various stages of seeking to recoup their losses through arbitration and the courts, governments facing pressure from those who suffered losses are likely to make a stab at regulatory changes to keep future investors from suffering the same fate.

In the U.S., UBS and others such as Raymond James sold investors Lehman structured notes promoting them as low risk and safe, but those structured products ultimately proved worthless in the wake of the Lehman collapse. The misery for these investors is shared in Asia by those who unwittingly bought similarly risky products called High Notes 5 and Lehman Minibonds through DBS and the Royal Bank of Scotland.

Investors from Singapore are now following the lead of their American counterparts and have recently begun filing multi-million dollar lawsuits against the firms that sold them these risky products. Some 10,000 small investors, many of them retired and risk averse, bought Lehman products that exposed them to far more financial danger than they knew.

It is worth noting by investors in Lehman structured notes that, at this point, authorities have found evidence of wrongdoing against the banks in Singapore that sold these other “low risk” Lehman products.

Alongside the lawsuits, these Singapore investors are petitioning the government for regulatory change, and insiders say there will likely be political fallout for the ruling party if there is none. But as in the U.S., these measures would be too little too late for small investors whose life savings have been wrecked following the Lehman collapse.

In the U.S., debate is now raging in Congress and on Wall Street about what form regulatory change should take to insure that future investors are not unknowingly exposed to financial risk.

Of note is the fact that securities regulators at FINRA (the Financial Industry Regulatory Association, formerly the NASD) warned brokerage firms as early as 2005 to provide accurate information to investors when selling structured products like Lehman Notes. 

Among the proposals is an agency whose job it would be to look out for small investors and to spot products, such as Lehman structured notes, that are at best unsuitable, or inappropriate, for them.  The proposed Consumer Financial Protection Agency is facing stiff opposition from the financial industry despite efforts this week by proponents of such an agency to scale back the scope of its mission.

The financial industry balks at the power of the agency and says it would kill creativity in the financial sector and put undue burdens on small business that offer credit to their customers. There are already some signs that discontent with big government and pressure on Congress from financial industry lobbyists could stymie any effort for meaningful change.

It will be interesting to see the final form of an agency aimed at protecting financial consumers, should it survive the political battle.

Vernon Healy is a Naples, Florida based law firm that assists investors nationwide in recovering significant losses caused by all manner of financial fraud and negligence in both court and arbitration.

The firm is aggressively investigating abuses by brokerage firms and representing multiple Lehman structured product investors in FINRA arbitration, among them:

-- Private investors who thought a comfortable retirement lay ahead. They now live with massive losses thanks to investments in Lehman Principle Protected Notes recommended by brokers who failed to adequately disclose risk.

-- A charitable trust that lost more than $900,000 in Lehman products. The trust’s representatives were led to believe the Lehman products had protected the principle investment. The losses have endangered this trust’s support of environmental causes, the arts and youth programs.

-- A couple who sold their successful business and planned to retire and live on investment income from the proceeds of the sale. The couple lost $650,000 of their principle to bad investments, some of which were made without the couple’s permission and included Lehman backed products. URL:

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

Vernon Healy law firm: UBS concentrated risky Lehman structured products and stocks in baby boomer’s nest egg

Naples, Fla. — UBS engaged in gross misconduct when it marketed and sold more than $125,000 in Lehman structured products to a Florida baby boomer couple nearing retirement after public warning signs about Lehman Brothers’ financial solvency had surfaced, according to a $700,000 claim filed today by the Vernon Healy law firm. 

The couple, of Bonita Springs, Fla., has lost close to $700,000 out of their retirement accounts at UBS. Their UBS broker incompetently exposed the couple to unsuitable and preventable risks by, among other things, over concentrating two of their IRA accounts — constituting the bulk of their UBS retirement accounts — in stocks, the claim states.

In addition, a novice UBS broker urged the couple to purchase $125,000 in Lehman structured products called “return optimization notes” on March, 26, 2008 — after significant concerns about Lehman’s creditworthiness surfaced following the collapse of Bear Sterns that deepened Wall Street’s subprime credit crisis, according to the claim.

UBS sold the couple their Lehman structured products after Lehman’s first quarter 2008 earnings report raised concerns in the financial industry about its creditworthiness.  As investment professionals, UBS was well aware, or should have been well aware, that Lehman’s credit risk was a significant concern when it sold the Lehman structured products, the claim asserts.   

The UBS (UBS) sales pitch, emphasized the safety of Lehman Structured Products.    However, the notes sold to the investors in this case, like so-called “principal protected” notes, were in fact risky, unsecured loans to Lehman Brothers, according to the claim. 

Lehman Brothers’ bankruptcy in September 2008 left holders of structured notes standing at the back of the line with other unsecured creditors. They may recover little of their original investment.

Structured products, including principal protected notes and return optimization notes, were initially sold only to institutional investors. More recently, major brokerage firms, including UBS (UBS), Merrill Lynch (MER), Barclays (BCS) and Wachovia (WB), have pushed their sales forces to dump these products on their own retail customers, securities attorney Chris Vernon said.

“Essentially, UBS was selling Lehman structured notes so Lehman could obtain unsecured loans from the unwitting investing public — including UBS’ own retail clients — to support its faltering balance sheet and operations,” Vernon said. “While investors were told they were buying safe ‘notes,’ or ‘structured products,’ they were actually funding a failed Wall Street bailout attempt.”

As early as 2005, industry regulators from the Financial Industry Regulatory Authority (formerly known as the NASD) raised concerns about the way that Wall Street brokerage firms and banks were marketing complex structured products, including structured notes, to individual investors. 

Vernon Healy is a Naples, Florida based law firm that is representing multiple Lehman structured product investors in FINRA arbitration. 

URL:

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

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