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

Vernon Healy Claim: UBS Used Bait and Switch While Selling Ohio Business Owner Lehman Notes

Naples, Fla. – UBS fraudulently misrepresented the investment products it was selling to an Ohio business owner, leading him to believe he was buying principal protected notes backed by UBS when in fact he was sold Lehman notes that were backed by the then financially struggling Lehman Brothers, a claim filed today by securities attorneys at Vernon Healy states.

The Ohio investor made numerous purchases for principal protected products recommended by his UBS financial advisor and totaling more than $150,000, the claim states. Even though the documents provided with the advisor’s initial sales pitch reflected UBS as the entity backing the notes, the actual purchase made on the investor’s behalf was for Lehman notes.

Moreover, the name “Lehman Brothers” did not appear on either the trade confirmation or on the monthly statements, the claim asserts. The sudden switch is especially troubling due to the fact that UBS recommended and sold the Ohio investor Lehman structured products just weeks before Lehman filed for bankruptcy. At that point, UBS clearly knew Lehman Brothers was in deep financial trouble, the claim asserts.

UBS had been well aware of Lehman Brothers financial woes long before it recommended structured products to the Ohio investor. Specifically, UBS had been propping up the faltering company with ultra-high interest loans in 2007 and 2008 while selling Lehman products to retail investors for huge profits.

“UBS engaged in a campaign to downplay and ignore concerns about Lehman’s creditworthiness,” said Chris Vernon, founder of Vernon Healy. “UBS encouraged, and in some cases even deceived its financial advisors into continuing to recommend these products to individual investors without advising them about Lehman’s credit and liquidity risks.”

Once the Lehman bankruptcy was underway, the Ohio business owner joined thousands of other Lehman notes holders left standing at the back of the line with all unsecured creditors.

In addition to compensatory damages, Vernon Healy is seeking significant punitive damages on behalf of the Ohio investor in light of UBS’s gross malfeasance, the claim states.

Vernon Healy has filed more than $12 million in Lehman notes arbitration claims on behalf of investors before the Financial Industry Regulatory Authority. The firm’s investigation of Lehman notes was featured in an AARP magazine article about the dangers of investing in structured products, which continue to be pitched by brokerage firms to retirees as safe investments. Vernon Healy’s ongoing investigation continues to reveal numerous concerns in relation to the sale of Lehman notes that have not been addressed by FINRA or federal regulators.

The securities attorneys at Vernon Healy represent individuals and businesses nationwide in disputes involving all manner of financial fraud and negligence, including Lehman notes, structured products, non-traded REITs, hedge funds, mutual funds, annuities, tax shelters and other investment products.

Contact:
Chris Vernon
Vernon Healy
(239) 649-5390
www.vernonhealy.com
www.lehmannotes.com

Vernon Healy Claim: UBS Deceived Texas Clients and Financial Advisors with Lehman Principal Protected Notes

Naples, Fla. – UBS fraudulently misrepresented Lehman principal protected notes not only to its brokerage firm clients but also to some of its own financial advisors, according to a claim filed today by securities fraud attorneys with the nationwide investor advocacy law firm Vernon Healy.

The nearly $300,000 claim against UBS filed by Vernon Healy today, alleges that the brokerage firm giant fraudulently sold Lehman brothers principal protected notes to a retired Texas couple after it knew that Lehman Brothers was in financial trouble, according to the claim.

“UBS told the retired couple that as a worst case scenario their principal investment would be protected,” said Chris Vernon, founder of Vernon Healy.  “In reality, the notes had no principal protection and were simply unsecured loans to Lehman, which were wrapped in a very complex structure, that helped conceal the lack of protection.”

Vernon Healy attorneys allege that UBS also misled the retired couple’s financial advisor by internally providing misleading and fraudulent marketing and training materials that erroneously described the notes as safe and principal protected, the claim states. UBS’s internal sales force was consistently and strongly encouraged to push  sales of Lehman structured products to main street investors while UBS was propping up Lehman with ultra-high interest loans, which demonstrated UBS’s knowledge of Lehman’s desperation and lack of liquidity, the claim asserts. 

At the onset of the Lehman bankruptcy, the Texas retirees joined thousands of other Lehman notes holders left standing at the back of the line with all unsecured creditors in the Lehman Brothers bankruptcy. According to the claim, UBS sold an estimated $1 billion in Lehman principal protected notes to main street investors. 

In addition to compensatory damages, Vernon Healy is seeking significant punitive damages on behalf of the Texas couple in light of UBS’s gross malfeasance, the claim states.

Vernon Healy has filed more than $12 million in Lehman notes arbitration claims on behalf of investors before the Financial Industry Regulatory Authority. The firm’s investigation of Lehman notes was featured in an AARP magazine article about the dangers of investing in so-called structured products, which have been increasingly pitched by brokerage firms to retirees as safe investments. Vernon Healy’s ongoing investigation continues to reveal numerous other concerns in relation to the sale of Lehman notes to retail investors that have not been addressed by FINRA or other regulators.

Structured products are extremely complex types of debt securities that include a derivative component and whose value at maturity is governed by arcane mathematical formulas, the claim states. 

For more information about Vernon Healy’s nationwide investigation of Lehman notes, visit lehmannotes.com.

The securities attorneys at Vernon Healy represent individuals and businesses nationwide in disputes involving all manner of financial fraud and negligence related to Lehman notes, structured products, non-traded REITs, hedge funds, fund of funds, bonds, mutual funds, annuities, tax shelters and other products.

Contact:
Chris Vernon
Vernon Healy
(239) 649-5390
www.vernonhealy.com
www.lehmannotes.com

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: FINRA fine of UBS for Lehman notes deception is woefully weak

The investor advocacy law firm of Vernon Healy, which represents Lehman principal protected notes investors around the nation, called the $2.5 million fine issued against UBS today by Wall Street’s self regulatory organization a disturbingly small amount.

FINRA, the Financial Industry regulatory Authority, fined UBS $2.5 million and ordered that the brokerage firm pay $8.25 million in restitution to UBS clients who purchased Lehman principal protected notes.

“I’m disturbed by the small size of the fine,” said Chris Vernon, who represents investor victims with more than $10 million in Lehman note losses. “FINRA, Wall Street’s self-regulatory organization, has handed one of its own a paltry fine for gross misconduct and deception of investors.”

Arbitration panels have repeatedly sided with investors against UBS in cases involving Lehman principal protected notes and other Lehman structured products. Although FINRA’s action helps investors who are pursuing claims, it comes after considerable time has lapsed, Vernon said.

“How long does it take FINRA to act?” said Vernon, who began filings cases on behalf of investors against UBS involving Lehman principal protected notes more than 2 years ago. More than a year ago, Vernon Healy detailed malfeasance by UBS during the months leading up to the Lehman bankruptcy which is also the focus of the FINRA investigation.

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 deal that was a disaster for Lehman, according to claims filed by Vernon Healy.

Investors who bought Lehman principal protected notes were told just that — that their principal was protected. But when Lehman collapsed and filed bankruptcy in September 2008, these investors lost virtually all their principal, according to claims filed by Vernon Healy.  

FINRA’s restitution order does not prevent customers from either pursuing their pending arbitration claims against UBS or from filing new arbitration claims, according to Vernon Healy.  What the agreement between FINRA and UBS does is to set the “floor” for claims filed by customers who purchased “100% principal protected” structured notes issued by Lehman Brothers during the relevant period and who meet the other criteria set forth by FINRA.

Those customers who pursue their claims in arbitration will recover at least the restitution amount in arbitration and may recover damages well in excess of that amount, depending on the facts of their individual cases and the findings of their arbitration panels, Vernon Healy believes.

Vernon Healy's investigation reveals that the same supervision lapses, unsuitable sales and misleading marketing and sales techniques that FINRA found also occurred in connection with many of UBS’s other structured product sales.

Written material obtained by Vernon Healy as part of its investigation more than a year ago showed 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 multiple claims filed against UBS by Vernon Healy.

These UBS-designed investment products supplied Lehman Brothers with an infusion of unsecured loans from main street investors as Lehman Brothers’ solvency became a concern, according to claims filed by Vernon Healy. The Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing essentially at the back of the line as unsecured creditors.

When pitching these structured products after the March 2008 collapse of Bear Sterns and through the summer of 2008, UBS omitted telling their own financial advisors and their clients that Lehman was on the brink of insolvency, according to claims filed by Vernon Healy.

The Vernon Healy law firm and its advocacy on behalf of Lehman note investors was recently featured in a March 2011 AARP Magazine article “The Time Bomb in Your Nest Egg” discussing the dangers of investing in structured products. The story told of a 55-year-old restaurant owner represented by Vernon Healy who was sold $130,000 in Lehman “principal protected notes” and other structured products that lost virtually all their value and also of a Michigan family represented by Vernon Healy that lost $275,000 on Lehman notes and other structured products sold by UBS.

The securities attorneys at Vernon Healy collectively have more than 30 years of experience representing investors who are victims of securities fraud and all manner of financial fraud and negligence.

For more information,
Contact Chris Vernon
cvernon@vernonhealy.com
(239) 649-5390

www.vernonhealy.com
www.lehmannotes.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

Lehman Principal Protected Notes Investor Awarded $2.2 Million in FINRA Arbitration

In another clear signal that Lehman Notes investors may be able to recoup their losses, a FINRA Arbitration Panel sided this week with a wealthy couple who bought Lehman “100% principal protected” notes and other Lehman structured notes from UBS.

Even better news for investors who have suffered Lehman losses is FINRA’s ruling that UBS must not only buy back the notes at their original cost from Thomas and Christine Motamed, but it must also pay six percent interest dating back to April 2008, when UBS sold the couple $2.2 million in Lehman products.

The Motameds bought $1.65 million worth of Lehman “100% Principal Protection Absolute Return Barrier Notes” and $550,000 of “Return Optimization Securities” weeks after the Bear Stearns collapse and less than six months before Lehman Brothers filed for bankruptcy.

Chris Vernon, whose law firm Vernon Healy has represented investors with nearly $10 million in Lehman notes losses thus far, said UBS has aggressively sold Lehman products to investors seeking a safe haven for their money.

“It is for this reason that the term "Principal Protected" is such an effective and deceptive sales tool to describe structured notes such as the Lehman notes sold by UBS,” Vernon said.

Vernon also said UBS used investors such as the Motameds as a source of funding to shore up failing Lehman Brothers.

“By the latter half of 2007 and well before the 2008 sale involved in the Motamed case, the credit crisis was well underway and Lehman's stock price fell,” Vernon said. “At the same time, Lehman's credit default swap ("CDS") spread -- the cost to insure a loan to Lehman against default - increased dramatically.  Both the stock and loan insurance price trends continued through the February - June 2008 time period, when UBS sold Lehman notes to the Motameds.”

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 investors such as the Motameds, who held Lehman notes and other Lehman structured products, standing at the back of the line with other unsecured creditors.

Vernon said Wall Street’s practice of dumping bad products on Main Street investors continues despite condemnation of this practice in decades past.

“Wall Street firms periodically use their own clients - including many fixed income investors - as a dumping ground for defective products they cook up in their home offices and then pitch worldwide to their financial advisors and clients,” Vernon said.

This practice continues because it is so profitable for brokerage firms such as UBS to engage in these unsavory practices, Vernon said. But his larger concern is that the current structured product version of this practice simultaneously enables the financial industry to borrow billions of dollars from main street investors with no collateral. As a result, the brokerage firms not only profit from creating and selling these structured notes, they also effectively receive loans from their own clients on terms so favorable that professional lenders would never consider them.

Vernon Healy is a Naples, Florida law firm that already 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 now expanded to sales of Lehman structured notes in Europe as well as the sales of other types of structured products sold in the U.S, such as “reverse convertibles,” which UBS refers to as “Yield Optimization Notes.”

The attorneys at Vernon Healy have decades of experience representing 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
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 another FINRA claim against UBS, alleging securities fraud over deceptive sale of Lehman notes

Vernon Healy investor advocacy law firm filed another claim against UBS today, alleging that the Wall Street giant committed securities fraud when it sold an Indiana couple high risk Lehman structured products after it already knew Lehman’s balance sheet was a disaster and heavily invested in highly risky mortgage and real estate assets.

UBS (NYSE: UBS) designed the Lehman structured products and marketed some of these structured products to its customers as safe and 100 percent principal protected even though the principal protected notes were essentially unsecured loans to now-bankrupt Lehman Brothers, according to the Vernon Healy claim filed today. UBS also sold its own structured notes to the couple, violating the spirit of an industry rule that forbids borrowing from customers.

The couple was worried about market instability and sought help from UBS in 2007 and 2008 to take their money out of the market and put it something safe.

UBS consistently portrayed the Lehman notes investments as “100%” principal protected on monthly statements to the couple, but the firm knew the notes were no more principal protected than other unsecured notes issued by borrowers.  UBS continued to push these products to its financial professional and retail investors long after it knew Lehman was at risk of failing.

UBS sold these high-risk products to the couple -- a sales manager and an elementary school employee -- when a staggering 70 plus percent of Lehman’s own assets were over concentrated in risky mortgage and real estate assets. At the time, Lehman was also in debt to UBS under high-interest, short term loans known as Repo 105 that were highly lucrative for UBS and which put UBS in the unique position of being able to assess and take advantage of Lehman’s increasing financial difficulties.

“Based on our ongoing investigation, it now appears that UBS was continuing to sell Lehman structured notes in the spring and summer of 2008 as though they were the equivalent of structured notes backed by other companies that were more stable and less of a credit risk than Lehman,” said Christopher Vernon, a founding partner of the Vernon Healy Law Firm.

The claim, filed before FINRA, the Financial Industry Regulatory Authority, seeks to recover the entire investment, plus attorney’s fees and costs, as well as treble damages to punish UBS for its wrongdoing in this case.  The Vernon Healy law firm has already filed millions of dollars in claims against UBS on behalf of Lehman structured note investors and anticipates filing additional claims through the balance of 2010.

The allegations in the couple’s claim include the corporate level wrongdoing of UBS in continuing its campaign to recommend these illiquid Lehman structured products to its own financial advisors and its retail investors without noting the significant and increasing risks tied to Lehman’s creditworthiness. 

According to the allegations in the claim, UBS’s actions also ran contrary to an advisory notice that NASD (now FINRA) issued in 2005, warning brokerage firms against selling structured products to any investor not approved for options trading. More recently, FINRA warned member firms that failed to abide by the 2005 notice that they would have to explain why.

Vernon Healy is a Naples, Florida law firm that already 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 now expanded to sales of Lehman structured notes in Europe as well as the sales of other types of structured products sold in the U.S, such as “reverse convertibles.”  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 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
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