Vernon Healy files another $800,000 in claims against UBS on behalf of Lehman principal protected notes investors

Naples, Fla. — UBS fraudulently misrepresented the safety of so-called Lehman principal protected notes that the firm sold to two elderly widows at a time when UBS knew of Lehman’s increasing financial desperation, according to separate claims filed today by the Vernon Healy investor advocacy law firm. 

The promised principal protection constituted a gross deception because the Lehman notes represented nothing more than unsecured loans by the investors to a financially faltering Lehman, according to the claims.

UBS knew of Lehman’s financial desperation — more than a year before Lehman filed bankruptcy — and was loaning Lehman money at predatory rates behind the scenes so that Lehman could remain solvent, according to the claims.
 
One woman, an elderly widow, was sold $750,000 in Lehman principal protected notes and Lehman structured products, in the last year of her life, according to the claim filed by Vernon Healy on her behalf today. She died in September 2008, the same month that Lehman filed bankruptcy, leaving behind 19 great-grandchildren.

The other woman, an 83-year-old widow from Naples, was sold $50,000 in Lehman principal protected notes in January 2008, less than nine months before Lehman Brothers filed for bankruptcy, according to a separate claim also filed by Vernon Healy today.

“The ‘principal protected’ label was grossly misused by UBS to deceptively market products with no ‘principal protection’ or ‘guarantee’ whatsoever beyond the promise of repayment by the borrower that exists with virtually any note or bond,” according to the claims.   

Just over a year ago, UBS was censured, sanctioned, and fined as a result of the Financial Industry Regulatory Authority’s investigation into UBS’s improprieties in promoting the Lehman structured products that were labeled as being “100 percent principal protected.” 

FINRA fined UBS $2.5 million and ordered the Swiss firm to pay $8.5 million in restitution to Lehman notes investors. UBS sold an estimated $1 billion in Lehman notes to investors.

Lehman note holders have been left standing at virtually the back of the line with other unsecured creditors in the Lehman Brothers bankruptcy. Lehman note investors received an initial distribution on April 17, but the initial distribution amounted to about 5 percent of investors’ principal investment.

“Much like the FINRA fine and restitution Order, the bankruptcy distribution is woefully inadequate to rectify the harm done to our clients,” securities attorney Chris Vernon, of the Vernon Healy law firm, said. In fact, the remaining distributions to investors will take another 3 to 5 years and will amount to less than 25 cents on the dollar according to information obtained from the Trustee by Vernon Healy. 

“UBS customers who were hoping to recover their losses from the bankruptcy court now know just how paltry that amount will be,” said securities attorney Susan Healy, of the Vernon Healy law firm. “FINRA arbitration is their best chance for meaningful compensation.” 

In an effort to gain additional recovery for investors beyond the bankruptcy and regulatory proceedings, Vernon Healy has filed more than $13 million in claims on behalf of individual Lehman note investors. Vernon Healy’s investigation and advocacy on behalf of Lehman note and structured product investors has been highlighted in AARP magazine.

For more information contact:

Chris Vernon
Vernon Healy, attorneys at law
(239) 649-5390