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

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

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

Wall Street using principal protected notes and other structured products to borrow collateral-free billions from main street investors

Naples, Florida — The Vernon Healy law firm is warning retirees to beware of structured products, principal protected notes, reverse convertible notes, and other structured products that Wall Street firms have increasingly dumped on conservative main street investors.

“The financial industry is effectively using structured products to borrow billions of dollars from Main Street investors with no collateral,” Chris Vernon is quoted as saying in the March issue of AARP magazine, the national publication for the retiree advocacy organization with more than 40 million members.

Chris Vernon and the Vernon Healy law firm represent investors with more that $10 million in losses on Lehman principal protected notes and other Lehman structured products sold by UBS.

Vernon Healy represents two of the investors quoted in the AARP Magazine article that warns investors about the dangers of structured products. Charles Replogle, a 55-year-old restaurant owner from Vero Beach, Fla., was sold $130,000 in Lehman “principal protected notes” and other structured products that lost virtually all their value. Rob Brunhild, 49, of Bloomfield, Mich., also represented by Vernon Healy, was investing for his family and 80-year-old mother. His family lost $275,000 on Lehman principal protected notes and other structured products.

"Clearly, Wall Street is targeting fixed-income investors, most of whom are retirees seeking a steady source of income while guarding against any material loss of principal," Vernon told AARP. The article notes that Vernon has represented hundreds of older investors who have been burned.

By “structuring” products, Wall Street gets paid to create the complex product via underwriting fees and then gets paid again to sell the product. Brokerage firms also use the complexity of these structured products to obscure the risk of loss of principal.

“A traditional bank wouldn’t make loans on these terms so why should retired investors take such a risk?” investor rights attorney Chris Vernon said. “Wall Street firms are borrowing from main street investors and asking retirees to loan them money with no collateral.”

The complexity, among other things, allowed UBS to dump Lehman principal protected notes on investors even as Lehman Brothers was on the verge of insolvency in the summer of 2008.

Investors who bought these Lehman principal protected notes were told just that — that their principal was protected. But when Lehman collapsed, these investors lost virtually all their principal. 

According to Vernon, there is no shortage of financial information on any given strategy or product.  In fact, there is an overwhelming amount of information available to investors. 

“What investors truly need today is independent and conflict-free advice from professionals qualified to analyze and interpret complex financial markets and complex financial products” Vernon says.  “Brokerage firms are providing conflict ridden recommendations along with a mountain of complex information in the form of a prospectus, which is the exact opposite of what investors need.”  

Christopher Vernon, founder of the Vernon Healy law firm, advocates for the rights of investors throughout the United States and abroad—both in and out of the courtroom and arbitration hearing room. Mr. Vernon currently holds an AV rating by Martindale-Hubbell, has been repeatedly recognized by his peers as a top securities attorney. Mr. Vernon has spoken at both national securities and national trial attorney conventions and has also conducted continuing education in the U.S. and abroad for securities regulators, CPAs, CFAs, CFPs, investment professionals, board certified business litigation lawyers and board certified trust and estate lawyers.