FINRA Orders UBS Financial Services to Pay $8.25M for Misleading Investors About Security of Lehman Brothers Principal Protected Notes

The Financial Industry Regulatory Authority is ordering UBS Financial Services to pay $8.25 million in restitution and a $2.5 million fine for misleading investors about Lehman Brothers principal protected notes (PPNs). The SRO says that the financial firm presented the investments in a way that caused clients to think that the notes came with 100% principal protection. Many brokers said that the notes, which were a hybrid financial product made up of currencies, bonds, stocks, commodities, and derivatives, were low-risk investments even though they knew (or should have known) that Lehman Brothers was in financial trouble. Also, investors did not know that the notes were only protected to the extent that Lehman Brothers was capable of paying. When Lehman Brothers filed for bankruptcy in September 2008, the PPNs became virtually worthless.

FINRA claims that UBS issued statements and made omissions that did not stress that the PPN’s were unsecured obligations of Lehman Brothers. The SRO is also questioning whether UBS fully understood the complexity of the notes and if this caused some of their mistakes when selling the financial product. FINRA says that not only did UBS lack the adequate supervisory system to overseee its financial advisers that were handling the Lehman notes, but also, the investment firm did not have appropriate suitability procedures to determine whether certain investors could handle the risks involved with the PPNs.

Numerous individual securities fraud arbitration claims and lawsuits have been submitted for investors over the Lehman Brothers structured notes. There was also a UBS class action complaint filed for all Lehman brothers PPN investors in 2008.

Our stockbroker fraud law firm want to remind you that filing your individual claim through FINRA arbitration increases your chances of recovering more than if you were a member of a securities class action case. If you sustained financial losses after investing in Lehman Brothers Principal Protected Notes, do not hesitate to contact Shepherd Smith Edward and Kantas, LLP and ask for your free case evaluation.

UBS Financial Services Fined $2.5M and Ordered to Pay $8.25M Over Lehman Brothers-Issued 100% Principal-Protection Notes, Institutional Investor Securities Blog , April 12, 2011
UBS to Pay $2.2M to CNA Financial Head for Lehman Brothers Structured Product Losses, Stockbroker Fraud Blog, January 4, 2011
Lehman Brothers Lawsuit Claims Its Bankruptcy Was In Part Due to JP Morgan Chase’s Seizure of $8.6 Billion in Cash Reserves, Stockbroker Fraud Blog, June 14, 2010
Our stockbroker fraud law firm want to remind you that filing your individual claim through FINRA arbitration increases your chances of recovering more than if you are a member of a securities class action case. If you sustained financial losses after investing in Lehman Brothers Principal Protected Notes, do not hesitate to contact us and ask for your free case evaluation.