{"id":5149,"date":"2011-04-12T00:00:00","date_gmt":"2011-04-12T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/04\/ubs_financial_services_fined_2"},"modified":"2022-04-04T13:20:32","modified_gmt":"2022-04-04T18:20:32","slug":"ubs-financial-services-fined-2","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/ubs-financial-services-fined-2\/","title":{"rendered":"UBS Financial Services Fined $2.5M and Ordered to Pay $8.25M Over Lehman Brothers-Issued 100% Principal-Protection Notes"},"content":{"rendered":"

The Financial Industry Regulatory Authority is fining UBS Financial Services, Inc.<\/a> $2.5 million and ordering it to pay $8.25 million in restitution for allegedly misleading investors about the “principal protection” feature of 100% Principal-Protection Notes. Lehman Brothers Holdings Inc. issued the PPNs Holdings Inc. before it filed for bankruptcy in 2008.<\/p>\n

FINRA contends that even as the credit crisis was getting worse, between March and June 2008 UBS advertised and described the notes as investments that were principal-protected while failing to make sure clients knew that they PPNs were unsecured obligations of Lehman and that the principal protection feature was subject to issuer credit risk. UBS also allegedly failed to:<\/p>\n

\u2022\tProperly notify its financial advisers of the impact the widening of credit default swaps was having on Lehman\u2019s financial strength
\n\u2022\tSufficiently analyze how appropriate the Lehman-issued PPNs were for certain clients
\n\u2022\tSet up a proper supervisory system for the sale of the Lehman-issued PPNs
\n\u2022\tProvide proper training or appropriate written supervisory procedures and policies
\n\u2022\tProvide adequate suitability procedures for determining who should invest<\/p>\n

FINRA also says that UBS developed and used advertising collateral about the PPNs that misled certain clients, such as the suggestion that a return of principal was certain as long as clients held the product until it matured. FINRA claims that the reason that some UBS financial advisers gave incorrect information to customers was because they themselves didn\u2019t fully understand the product. <\/p>\n

FINRA says that because UBS\u2019s suitability procedures were inadequate and certain PPN\u2019s lacked risk profile requirements, the product was sold to investors who were not willing or shouldn\u2019t have been allowed to take on the risks involved. More often than not it was these investors who were likely to depend on the Lehman PPNs\u2019 “100% principal protection” feature that were \u201crisk averse.\u201d<\/p>\n

By agreeing to settle, UBS is not denying or admitting to the charges. <\/p>\n

Related Web Resources: <\/strong>
\nFINRA Fines UBS Financial Services $2.5 Million; Orders UBS to Pay Restitution of $8.25 Million for Omissions That Effectively Misled Investors in Sales of Lehman-Issued 100% Principal-Protection Notes<\/a>, FINRA, April 11, 2011<\/p>\n

UBS to shell out $10.75M to settle Lehman-related row<\/a>, Investment News, April 11, 2011<\/p>\n

\nMore Blog Posts: <\/strong>
\nUBS to Pay $2.2M to CNA Financial Head for Lehman Brothers Structured Product Losses<\/a>, Stockbroker Fraud Blog, January 4, 2011<\/p>\n

UBS Must Pay Couple $530,000 for Lehman Brothers-Backed Structured Notes, Institutional Investors Securities Blog, November 5, 2010<\/p>\n

Lehman Brothers\u2019 \u201cStructured Products\u201d Investigated by Stockbroker Fraud Law Firm Shepherd Smith Edwards & Kantas LTD LLP<\/a>, Stockbroker Fraud Blog, September 30, 2008\n<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Financial Industry Regulatory Authority is fining UBS Financial Services, Inc. $2.5 million and ordering it to pay $8.25 million in restitution for allegedly misleading investors about the “principal protection” feature of 100% Principal-Protection Notes. Lehman Brothers Holdings Inc. issued the PPNs Holdings Inc. before it filed for bankruptcy in 2008. FINRA contends that even […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3752,3739,3824,3741,3755],"tags":[],"class_list":["post-5149","post","type-post","status-publish","format-standard","hentry","category-financial-firms","category-finra","category-lehman-brothers","category-securities-fraud","category-ubs"],"yoast_head":"\nUBS Financial Services Fined $2.5M and Ordered to Pay $8.25M Over Lehman Brothers-Issued 100% Principal-Protection Notes — Investor Lawyers Blog — April 12, 2011<\/title>\n<meta name=\"description\" content=\"The Financial Industry Regulatory Authority is fining UBS Financial Services, Inc. $2.5 million and ordering it to pay $8.25 million in restitution for — April 12, 2011\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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