Structured Products Attorney - Structured Products, Lehman Brothers Principal Protected Notes and Bankruptcy

Investors harmed by the Lehman Brothers bankruptcy get mixed messages this week

The Lehman Brothers bankruptcy that shook the financial world in 2008 still has investors who lost billions in the collapse wondering when they will begin to recoup their losses. Two decisions this week – one by a judge and the other by the Lehman Estate – did little to bring clarity to the situation or hope that investors will see a significant portion of their money anytime soon, say securities attorneys at Vernon Healy, the investor advocacy law firm.

In one development, a New York bankruptcy judge cleared the way for Neuberger Berman Group LLC to buy the 48 percent remaining equity interest in that company from Lehman Brothers Holdings Inc. over five years, generating about $1.5 billion.

In a second development, Lehman Brothers Holdings Inc. said it would take on billionaire Sam Zell's Equity Residential in a fight for control of Archstone, the company's largest real estate asset. After the Lehman collapse, the company owned 47 percent of Archstone and banks held the remaining 53 percent. But the banks sold half their holdings to Zell earlier this month, and Zell is seeking to buy their remaining 26.5 percent. Lehman Holdings will seek permission this week from a bankruptcy judge to exercise its option to match Zell’s offer with a $1.33 billion offer of its own.

While the Neuberger Berman deal injects a significant amount of cash into Lehman Holdings’ coffers, it appears the money is coming in over five years, meaning investors may see a trickle of cash versus a lump sum. Some estimates put the overall recovery for most investors in the 18 to 20 cents on the dollar range. If these estimates are correct, then investors may suffer an 80 percent or more loss of principal from products that UBS represented to be “principal protected.”

“UBS simply deceived my clients and thousands of other investors – as well as many UBS financial advisors – with respect to the principal protection in these products.  This deception was especially egregious given what UBS really knew about Lehman’s financial situation, including the Archstone purchase,” said securities attorney Chris Vernon of the Vernon Healy law firm.  

And the current Lehman contest with Zell over control of Archstone, while possibly viable for a healthy company is questionable in light of the bankruptcy, Vernon said.

“Lehman made a bad business decision in acquiring Archstone. Given the number of retail clients of UBS and other firms caught up in this bankruptcy as unsecured creditors,  Lehman should be focused on liquidating assets and distributing the proceeds to my clients and other unsecured creditors rather than extending the time that Lehman structured note investors have to wait to recoup what they can from the bankruptcy,” Vernon said. 

Christopher Vernon represents investor clients with more than $10 million in losses due to the Lehman Brothers bankruptcy. Vernon’s investigation into Lehman structured products has been featured in AARP magazine.

Contact for media inquiries.

Chris Vernon
Vernon Healy
239-649-5390
www.vernonhealy.com

Vernon Healy securities fraud attorneys file another half million in Principal Protected note claims against UBS

NAPLES -- The investor advocacy legal team at Vernon Healy, in conjunction with Orlando, Florida attorney Neal Blaher, filed more than half a million dollars in claims today against UBS, alleging the Wall Street firm committed securities fraud when it  created and sold investment products such a Lehman notes as well as its own in-house “principal protected” structured products to Main Street investors.

Among those seeking FINRA arbitration in the claims are a retired telecommunications executive, a couple who owned a construction business, a fundraiser for non-profit organizations and a retired dental assistant, according to the claims filed today before FINRA, the Financial Industry Regulatory Authority. The claims seek compensatory and punitive damages against UBS (NYSE:UBS).

The Vernon Healy legal team represents investors with more than $10 million in brokerage fraud claims against UBS related to structured products, principal protected notes and reverse convertibles – referred to as “Yield Optimization Notes” by UBS.

UBS hawked these unsuitable products to risk averse investors and assured them that “principal protected” meant their core investment was safe, according to the claims filed today.

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, according to the claims.

But the truth of what these investors experienced flies in the face of any principal protection that exists with any promissory note, the claims allege. Ignoring its fiduciary duty to these investors, UBS disregarded a series of red flags that warned of the looming Lehman collapse, such as the company’s Repo 105 transactions and its Archstone REIT, or Real Estate Investment Trust, deal that was a disaster for Lehman, according to the claims.

UBS worked to shore up the failing Lehman Brothers with non-collateralized loans from its own client base of retail investors, while making a handsome profit from its own dealings with Lehman, the claims state. For much of the time that UBS was convincing its clients to loan money to Lehman through Lehman principal protected notes and other structured products, UBS itself was loaning money to Lehman on safer and far more profitable terms than the structured note loans, the claims say. 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, the claims allege.

“The Lehman collapse that UBS clearly saw coming left the investors in the claims filed today as well as many others holding nearly worthless investment products and standing at the back of the line of Lehman’s creditors,” Vernon said. “FINRA arbitration panels are recognizing the gross misconduct perpetrated by UBS and frequently are siding with investors.” 

Vernon Healy is a Naples, Florida law firm that represents UBS investors in Florida and multiple other states in the U.S.  Vernon Healy’s ongoing investigation of Lehman structured note sales in the United States has expanded to sales of Lehman structured notes in Europe and South America as well as other structured products sold, such as “reverse convertibles.”  AARP Magazine recently featured Vernon Healy’s Lehman principal protected notes investigation in an article warning retirees about the dangers of structured products.

The attorneys at Vernon Healy collectively have more than 30 years of experience representing investors who are victims of stock fraud and stock losses due to misconduct. Vernon Healy securities attorneys are experienced in securities arbitration and assist clients in recovering losses caused by all manner of financial fraud and negligence.

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 represents investors with close to $10 million in Lehman losses

It’s close to two years since the collapse of Lehman Brothers on Sept. 15 that touched off the financial meltdown that plunged economies around the world into the Great Recession.
 
Our firm is assisting investors who are seeking accountability from the perpetrators of the “Great Deception.”

Vernon Healy currently represents investors with close to $10 million in Lehman “principal protected notes” , reverse convertibles related to Lehman, and other structured products. Brokerage firm UBS sold the  principal protected notes as a safe investment.  Many investors,  including many retirees, were told their Lehman investment was 100 percent “principal protected.”  

The disclosure that the SEC investigation of Lehman’s so-called “Repo 105”  and "Archstone" deals  are heating up is welcome news.   Among other things, the “Repo 105” deals allowed Lehman to conceal as much as $50 billion in debt from its balance sheet. 

Our firm has done substantial research as part of our Repo 105 investigation and Archstone investigation on behalf of investors. 

 
What’s been lost in the coverage of the SEC investigation so far is the fact that UBS, as a counterparty to these Repo 105 deals, knew about the financial  problems in play with Lehman. However, UBS continued to push these supposedly safe, “principal protected”  and other Lehman structured products  on their own clients, even as they saw behind the scenes just how precarious Lehman’s financial solvency had become. 

For more information, contact Vernon Healy at (239) 649-5390.

Lehman Brothers attempts to convert Archstone REIT deal debt

According to Reuters, Lehman Brothers is continuing its efforts to convert some of the $5 billion plus debt obligation from its 2007 leveraged buyout of Archstone Real Estate Investment Trust (Archstone REIT) into the equivalent of preferred stock and extend the repayment date on the balance of the debt.

As mentioned in an earlier commentary I wrote on the Lehman Brothers Bankruptcy Examiner's Report and the Repo 105 issue, this REIT deal was a bad one for Lehman Brothers. Industry insiders such as UBS and other firms knew it overexposed Lehman's balance sheet to the vagaries of the already precarious real estate market.

Most investors in Lehman Brothers Principal Protected Notes that were sold in the U.S. by firms such as UBS and Raymond James, and abroad by firms such as Citi and Credit Suisse, are looking to recover their losses through both claims against the sellers of these defective products and through mitigation efforts.

Claims against sellers include class action participation for smaller investors and FINRA arbitration for investors with more significant losses like those represented by our firm. Mitigation efforts by investors include  efforts to recover a likely small portion of investors’ Lehman notes investment through either filing claims in the Lehman Brothers bankruptcy proceeding — for those willing to wait — or investigating possible sales of these notes on what now might be an now-emerging secondary market. Exploring the possibility of selling on a secondary market is for those who wish to recoup funds sooner than the bankrupcty timetable and are willing to recoup less than they might ultimately receive through the Lehman bankruptcy.

A cross section of Vernon Healy’s clients who have filed FINRA arbitration claims involving Lehman structured notes includes baby boomers, a teacher, a hospital employee, wealthy retirees, and a charitable foundation and reveals how aggressively and indiscriminately that firms such as UBS were encouraging their financial advisors to recommend Lehman Structured notes to their client base. Vernon Healy filed a $1 million arbitration claim against UBS on behalf of an investor in February and an $800,000 claim against UBS on behalf of another investor in March.