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 and the Carrigan law firm file $1 million in securities fraud claims against UBS for Lehman principal protected note conduct in Texas state court

Houston, Texas — Attorneys for investors have filed $1 million in securities fraud charges in Texas state court against UBS in an effort to force UBS to answer for its Lehman principal protected note sales in a public court case versus private industry-sponsored arbitration.

Trial lawyer Stephen Carrigan, who has hired nationwide investor protection law firm Vernon Healy as co-counsel, is pursuing two lawsuits in Texas state court where UBS may have to defend its conduct in a public venue versus the secret industry-sponsored arbitration forum run by FINRA, the Financial Industry Regulatory Authority. FINRA proceedings are often closed to the public and case documents typically aren’t public record during the proceedings.

“The closed door FINRA proceedings have allowed UBS to hide some of its most egregious conduct from public view and public accountability,” attorney Carrigan said. “We want UBS to answer for its conduct in a public court case before a public jury.”

Arbitrators have repeatedly sided with investors and against UBS in FINRA arbitration in cases involving Lehman principal protected notes that were pitched and sold to investors as safe and 100 percent principal protected. The suits — one filed in Nueces County, Texas and the other filed in Harris County, Texas — call upon a jury to impose significant punitive damages against UBS.

“FINRA has only imposed very limited monetary sanctions as a result of finding gross misconduct, and as a result the monetary sanctions are incredibly inadequate in light of the enormous profits UBS obtained by taking advantage of Lehman’s financial troubles to engage in a tremendously lucrative predatory lending strategy while simultaneously earning fees and commissions from the Lehman products it sold to its customers without disclosing the risks,” one of the lawsuits claims. “Very significant punitive damages are appropriate in light of UBS’ gross malfeasance in this case.”

Carrigan is also the Plaintiff in one of the lawsuits filed against UBS on May 14, 2011. The suit claims a broker sold him $750,000 in Lehman principal protected notes and repeatedly, in essence said “there was no downside risk in these notes and that the worst possible case was the Plaintiffs would break even and receive a 100 percent guaranteed return of their investment,” the lawsuit claims.

UBS (NYSE: UBS) designed the Lehman structured product and marketed it to its customers as safe and 100 percent “principal protected” even though in reality, the principal protected notes were essentially an unsecured loan to now-bankrupt Lehman Brothers.

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

In the second lawsuit, the broker sold a Texas investor $300,000 worth of Lehman principal protected notes. After the Lehman bankruptcy, the investor saw the value of the notes drop to zero on his monthly account statement, the lawsuit states. Initially, the broker told the investor it was just “an accounting error” but later the broker said UBS would make its clients whole, which didn’t happen.

In April, FINRA hit UBS with a $2.5 million misconduct fine for its sales practices with respect to Lehman structured products. Following the announcement, investor rights attorney Christopher Vernon blasted the action as inadequate, saying: “FINRA, Wall Street’s self-regulatory organization, has handed one of its own a paltry fine for gross misconduct and deception of investors.”

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. Vernon Healy, based in Naples, Florida, represents investor victims with Lehman note losses in excess of $10 million.

For more information contact:

Christopher Vernon
Vernon Healy, attorneys at law
999 Vanderbilt Beach Road, Suite 200
Naples, Florida 34109
239-649-5390
877-649-5394
info@vernonhealy.com
vernonhealy.com
lehmannotes.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.

UBS dumped defective structured products on retirees

The sale of Lehman notes and other structured products by UBS is a classic example of why doing business with a Wall Street firm is hazardous.

These Wall Street firms periodically use their own client base – including many fixed-income retired investors – as a dumping ground for defective products, including structured notes and reverse convertibles, which are also called “return optimization notes.” The brokerage firms cook up these structured products in their home office and then pitch them worldwide to their financial advisors and client base.

Although this has gone on in various forms for decades, my larger concern is that these structured products are now effectively being used by the financial industry to borrow billions of dollars from main street investors with no collateral.

A traditional bank wouldn’t make loans on these terms so why should retired investors take such a risk? Wall Street is borrowing from main street investors and asking retirees to loan them money with no collateral.

Unfortunately, most retired investors don’t understand these products and the deal they are effectively making.

By “structuring” products, Wall Street achieves the dual purpose of getting paid to create the complex product via underwriting fees and then getting paid again to successfully sell the product. Brokerage firms use the complexity of these structured products to obscure the risk of loss of principal.   The complexity, among other things, allowed UBS and other firms to promote these products with little focus on the actual entity borrowing the money – an egregious omission in the case of Lehman as the borrower.

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.

When pitching these structured products through the summer of 2008, UBS omitted telling their own financial advisors and their clients that Lehman was on the brink of insolvency.

To put the enormity of this omission into perspective, imagine your financial advisor suggesting that you buy a corporate bond and adding that the identity of the corporation backing the bond is not really important in deciding which bond to buy.

These structured products create an especially troubling conflict of interest when the money put up by investors for these notes goes to the same brokerage firm selling them. For example, UBS sold “UBS return optimization notes” to its own base of UBS clients in addition to selling Lehman notes and Lehman return optimization notes.

UBS – and other Wall Street firms – are recommending that their own clients loan money to them on an unsecured basis.  In other words, the financial advisor is effectively suggesting that the best possible investment for the client would be to make an unsecured loan to the financial advisor.  It is amazing to us that this is an accepted and widespread practice in the securities industry.
Clearly, Wall Street is targeting fixed-income investors, most of whom are retirees seeking a steady source of income who want to guard against any material loss of principal, to sell these investments.  As a result, firms such as UBS have deceptively used the term “principal protected” very effectively to lull fixed income investors into focusing on the enhanced income opportunities provided by structured notes rather than on the true risks of principal loss underlying these products.

Like that quote attributable to Willie Sutton – who robbed banks because “that’s where the money is” – Wall Street targets wealthy retirees who are looking for something safe but that has a return that is more appealing than CDs or Treasury Bonds.  For this reason, the term “Principal Protected” is such an effective and deceptive sales tool to describe structured notes such as the Lehman notes sold by UBS.

Our firm represents investors with more than $10 million in Lehman notes claims, and we have conducted an extensive nationwide investigation that has collected information from financial advisors and investors from around the country.

For more information on whether you have a claim involving a structured product, contact theVernon Healy law firm at 239-649-5390 or Toll Free at 877-649-5394 or 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 UBSmust 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

Lehman’s bankruptcy exposed wrongdoing of other Wall Street Players

On the two year anniversary of its collapse and bankruptcy filing, many contend that Lehman Brothers hid the full extent of its problems from the outside world until the bankruptcy.  While this may be true with respect to main street investors, don’t let Wall Street fool you into thinking that its major players didn’t see it coming.

One example of Wall Street’s detailed knowledge of Lehman’s problems well in advance of its bankruptcy involves the Union Bank of Switzerland, commonly known as UBS. This is significant to us as retail investors because UBS, like some other financial institutions on Wall Street, used this knowledge to its own advantage rather than protect its own clients or the investing public.

Although it would be impossible to detail all of what UBS knew about Lehman in this short commentary, some of what we have pieced together during our investigation is detailed below. This intimate knowledge that UBS had of Lehman was due to its relationship as a lender of short term and collateralized loans to Lehman.

In 2007, UBS discussed a possible merger with Lehman.1  During that period, more than 75 percent of Lehman’s overall equity —more than $100 billion— was concentrated in risky mortgage and real estate assets. So large was the amount of Lehman’s illiquid assets during this period that Lehman employees referred to their balance sheets as “dead assets schedules.”2  During this period, UBS also became aware that Lehman’s credit default swap (“CDS”) spread — the cost to insure a loan to Lehman against default — increased dramatically.

Throughout this same period, UBS was heavily recommending and selling “structured notes” issued by Lehman to its own clients. Although “structured notes” are very complicated products not understood by many financial advisors, much less retail investors, these products are for the most part unsecured and illiquid medium term loans to Lehman.

While urging its own client base to effectively loan money to Lehman on an unsecured basis through illiquid structured notes, UBS was using its own firm money to make fully collateralized short term loans to Lehman, charging outrageously high interest rates.  These Repo 105 loans by UBS to Lehman are now the focus of an SEC investigation of Lehman.3   UBS was able to charge such high interest rates on these loans because it was aware of Lehman’s severe financial problems and resulting desperate need for the Repo 105 loans. 4

Through the spring of 2008, UBS continued to capitalize on Lehman’s problems by charging Lehman shocking rates of interest for fully collateralized short term loans.5   Simultaneously, UBS continued to profit from the recommendation and sale of Lehman “structured notes” – which were loans to Lehman by UBS clients that were unsecured, longer term, and far less appealing in terms of likely returns than the “Repo 105” loans that UBS was making to Lehman.

How outrageous was UBS’s behavior? By way of example, while still selling Lehman structured notes to its own clients, UBS charged the now “desperate” Lehman an interest fee of $186 million on a very short term and fully collateralized multi-billion dollar loan.6  If this short term loan return were annualized, it would equate to a return to UBS of more than 150 percent annual interest on the loan. As one of Lehman’s own employees said in early 2008, “Everyone knows 105 is an off balance sheet mechanism so counterparties are looking for ridiculous levels” to try to squeeze Lehman .7

Although the collateral and return disparities between the loan deals that UBS made for its clients and the loan deals that UBS made for itself are very troubling, it was the liquidity disparity that became especially significant in the summer of 2008 leading up to Lehman’s bankruptcy.  Specifically, UBS clients holding the Lehman structured notes recommended by UBS were effectively unable to sell or liquidate these notes until they matured. In contrast, over the summer of 2008, UBS significantly reduced its weekly Repo 105 loans it had made to Lehman.

For the foregoing reasons, the Lehman bankruptcy in September of 2008 had a far greater impact on UBS’s clients than on UBS itself.  When Lehman declared bankruptcy, UBS investors who had invested in Lehman structured notes were left standing at the back of the line with the unsecured creditors in the Lehman bankruptcy and will likely recover little of their original investment. In contrast, after the Lehman bankruptcy announcement, UBS issued a press release8 regarding its limited exposure due to its loans and other transactions with Lehman. Based on our investigation, it appears that while UBS was systematically shedding its own exposure to Lehman debt, it was continuing to develop and pitch Lehman structured notes with so-called principal protection to its own client base.

UBS’s public statement earlier this year that the Lehman Bankruptcy Report does not show that the “counterparties such as UBS acted inappropriately” is dubious. The Lehman Bankruptcy Report was designed to look into the activities of Lehman, not other financial institutions on Wall Street, like UBS. In reality, the Lehman Bankruptcy Report represents further evidence that firms such as UBS took advantage of the Lehman situation for their own benefit, while utterly failing their own clients.

Christopher Vernon is a Naples based attorney with the law firm Vernon Healy.  He 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 in The Best Lawyers in America, and has also been consistently recognized in the Florida editions of the Super Lawyers publication. 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 CPAs, CFAs, CFPs, investment professionals, board certified business litigation lawyers and board certified trust and estate lawyers. Mr. Vernon has also provided training for and been retained as an expert by government agencies on securities matters.

———–

  1 See Lehman Brothers Examiners Report dated March 11, 2010, Volume 8, Page 52
 2 Lehman Brothers Examiners Report Volume 3, Page 842
3 See “SEC Homes In on Lehman, ‘Funds of Funds’.” The Wall Street Journal. September 10, 2010
4 See Lehman Brothers Examiners Report Volume 3, Page 880 Footnote 3382
 5 Id.
6 Id. (reference to email LBEX-DOCID 3207903)
7 Lehman Brothers Examiners Report Volume 3, Page 881
See UBS Press release from September 16, 2008

ARS and Lehman Brothers Principal Protected Notes sales pushed by UBS: A double dose of disgust

Vernon Healy’s ongoing investigation of the sale of Lehman Brothers structured notes by UBS is turning up evidence consistent with the allegations of wrongdoing made by New Hampshire securities regulators against UBS.

The Vernon Healy investigation and the claim from securities regulators reveal a pattern of behavior by UBS that shows that the firm aggressively marketed Lehman Brothers principal protected notes and other Lehman structured notes to its own clients despite Lehman Brothers’ precarious financial position.  In one of the claims filed so far this year by Vernon Healy, the law firm alleges that UBS committed similar misconduct involving both auction rate securities and structured notes, including Lehman structured notes, much to the misfortune of main street investors.

Vernon Healy filed the claim on behalf of a surgery assistant who experienced mishandling of her retirement nest egg when UBS built her a retirement account that consisted of auction rate securities and structured notes backed by the financial sector.

Vernon Healy does not believe this is a unique situation within the UBS system.

“This double whammy of it coming to light that UBS misled investors about auction rate securities and soon thereafter coming to light that UBS also misled investors about structured notes has created a sense that UBS has effectively betrayed both its clients and undercut the credibility of its own financial advisors — some of whom have now left the firm in disgust,” investor rights attorney Chris Vernon said.

The Vernon Healy claim on behalf of the investor described above alleges that UBS urged the investor to buy auction rate securities after UBS already knew that the auction rate securities market was deteriorating and similarly urged the investor to buy Lehman and other structured notes from the financial industry after it knew that Lehman and the financial industry were having problems.

The claim filed by New Hampshire securities regulators alleges something similar. In that filing, regulators accuse UBS of failing to warn investors about the potential risks of its structured investment products once Lehman Brothers began to experience financial problems.

Vernon Healy, based in Naples, Florida, represents investors nationwide who are victims of stock fraud and stock losses due to negligence and misconduct. Vernon Healy securities attorneys are experienced in complex financial litigation, including FINRA arbitration. The firm is currently representing multiple Lehman structured product investors in FINRA arbitration.

Investor wins again in Lehman note arbitration case against UBS

Lehman structured note investors have reason to celebrate again. With the latest Financial Industry Regulatory Authority (FINRA) arbitration ruling announced last week, UBS customers who lost money on Lehman Brothers principal protected notes are now five for five, with the decisions going against UBS and in favor of the customers in every reported case.

In the latest reported arbitration award, the FINRA panel awarded more than $400,000 and to a pair of investors who bought Lehman Brothers structured notes, including principal protected notes, from UBS in early 2008.

These notes were among $1 billion worth of Lehman products that UBS sold to U.S. investors, according to a UBS statement to Bloomberg.

Other brokerages, including Raymond James and Credit Suisse, also pushed Lehman structured products to their clients.  The products are now virtually worthless following theLehman bankruptcy in September 2008.

This FINRA ruling and growing number of big and small investors lining up to recover losses fromUBS underscores the gross negligence UBS demonstrated when it pushed the now nearly worthless Lehman structured products on unwitting investors. It also reveals the growing momentum for those wronged investors who choose to seek legal counsel in attempting to recover their losses from UBS.

Vernon Healy began filing claims against UBS on behalf of investors in early 2009 and has filed almost $2 million in Lehman note arbitration claims against UBS on behalf of investors in the past 2 months alone.

A significant number of individual investors represented by Vernon Healy have had Lehman principal protected note losses in excess of $500,000. The international media have recognized Vernon Healy’s investigative efforts involving Lehman notes and individuals from overseas, especially from the U.K., are contacting Vernon Healy to assist them in pursuing UBS in connection with the sale of Lehman structured notes in Europe.

Based on the investigation by Vernon Healy, it appears that UBS even misled its own financial advisors regarding the safety of the Structured Notes, including the Lehman Principal Protected Notes, that UBS so heavily promoted.

Vernon Healy is currently representing multiple Lehman structured product investors in FINRA arbitration.

For more information, 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) 649-5394email: info@vernonhealy.com

Investors around the globe still living a Lehman Brothers nightmare

Just over a year ago, investors first faced the waking nightmare of 150-year-old global finance giant Lehman Brothers making the largest bankruptcy filing in U.S. history. It was the first domino to fall in the chain of events that gave rise to a worldwide recession.

A year later, the fallout from the bankruptcy continues around the globe. While investors, including ones represented by Vernon Healy, are in various stages of seeking to recoup their losses through arbitration and the courts, governments facing pressure from those who suffered losses are likely to make a stab at regulatory changes to keep future investors from suffering the same fate.

In the U.S., UBS and others such as Raymond James sold investors Lehman structured notes promoting them as low risk and safe, but those structured products ultimately proved worthless in the wake of the Lehman collapse. The misery for these investors is shared in Asia by those who unwittingly bought similarly risky products called High Notes 5 and Lehman Minibonds through DBS and the Royal Bank of Scotland.

Investors from Singapore are now following the lead of their American counterparts and have recently begun filing multi-million dollar lawsuits against the firms that sold them these risky products. Some 10,000 small investors, many of them retired and risk averse, bought Lehman products that exposed them to far more financial danger than they knew.

It is worth noting by investors in Lehman structured notes that, at this point, authorities have found evidence of wrongdoing against the banks in Singapore that sold these other “low risk” Lehman products.

Alongside the lawsuits, these Singapore investors are petitioning the government for regulatory change, and insiders say there will likely be political fallout for the ruling party if there is none. But as in the U.S., these measures would be too little too late for small investors whose life savings have been wrecked following the Lehman collapse.

In the U.S., debate is now raging in Congress and on Wall Street about what form regulatory change should take to insure that future investors are not unknowingly exposed to financial risk.

Of note is the fact that securities regulators at FINRA (the Financial Industry Regulatory Association, formerly the NASD) warned brokerage firms as early as 2005 to provide accurate information to investors when selling structured products like Lehman Notes.

Among the proposals is an agency whose job it would be to look out for small investors and to spot products, such as Lehman structured notes, that are at best unsuitable, or inappropriate, for them.  The proposed Consumer Financial Protection Agency is facing stiff opposition from the financial industry despite efforts this week by proponents of such an agency to scale back the scope of its mission.

The financial industry balks at the power of the agency and says it would kill creativity in the financial sector and put undue burdens on small business that offer credit to their customers. There are already some signs that discontent with big government and pressure on Congress from financial industry lobbyists could stymie any effort for meaningful change.

It will be interesting to see the final form of an agency aimed at protecting financial consumers, should it survive the political battle.

Vernon Healy is a Naples, Florida based law firm that assists investors nationwide in recovering significant losses caused by all manner of financial fraud and negligence in both court and arbitration.

The firm is aggressively investigating abuses by brokerage firms and representing multiple Lehman structured product investors in FINRA arbitration, among them:

– Private investors who thought a comfortable retirement lay ahead. They now live with massive losses thanks to investments in Lehman Principle Protected Notes recommended by brokers who failed to adequately disclose risk.

– A charitable trust that lost more than $900,000 in Lehman products. The trust’s representatives were led to believe the Lehman products had protected the principle investment. The losses have endangered this trust’s support of environmental causes, the arts and youth programs.

– A couple who sold their successful business and planned to retire and live on investment income from the proceeds of the sale. The couple lost $650,000 of their principle to bad investments, some of which were made without the couple’s permission and included Lehman backed products. URL:

For more information, contact:
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
http://vernonhealy.com/
http://www.protectinginvestors.com
(239) 649-5390
Toll Free: (877) 649-5394
email: acostanzo@vernonhealy.com

Brokerage Firms like UBS who sold clients Lehman Principal Protected Notes appear to have ignored Lehman Brothers warning signs

Warning signs that Lehman Brothers faced serious trouble became evident within the financial industry prior to the summer of 2007.

That assessment is based on the work of Jim Kaplan, of the company Audit Integrity, a firm that offers “forensic analysis” research.

An acceleration of receivables at Lehman beginning in summer 2006 marked the first warning sign, according to Kaplan.  In February 2007, Lehman announced a repurchase of approximately one fifth of its shares outstanding — or 100 million shares. By May 2007, key insiders had begun to dump 60 million shares, Kaplan reports.

With those warning signs evident in 2007, the $2.8 billion in Lehman “Principal Protected” Notes sold to investors in 2008 is nothing short of astounding.

To put this $2.8 billion of potentially lost principal into perspective, consider the purchasing power in the economy that it represents: $2.8 billion could pay for 14,000 homes that cost $200,000 each. It could pay for 140,000 Toyota Camrys. It could buy $100 worth of groceries for 28 million families.

Principal Protected Notes are one type of so-called structured product that brokerage firms have hawked to investors in recent years.

On its face, the name “Principal Protected Note” suggests that an investors’ principal is protected. There’s nothing vague about the name.

So it’s no wonder that investors now find themselves dumbfounded that they can’t get back the principal investment they thought was secure.

With Lehman insolvent, investors who want their principal back now find themselves at the back of the line in bankruptcy court as Lehman’s unsecured creditors.

UBS and others misrepresented these and other complex products to investors even though industry regulators put brokers on notice as early as 2005 to make sure that they accurately described the complexities and associated risks of structured products.

At Vernon Healy, we’re investigating misconduct on the part of major brokerage firms including UBS (UBS), Merrill Lynch (MER), Barclays (BCS) and Wachovia (WB) —particularly their failed due diligence in vetting these products or ignoring or concealing the results of any due diligence they did. We’re examining misrepresentations and omissions made by these firms about the true state of affairs at Lehman and the safety and efficacy of these products and the conflicts of interests that drove brokerage firms to dump these products on their retail customers.

Our investigation has revealed that brokerage firms, particularly UBS, continued to hawk Lehman Principal Protected Notes even after the March 2008 collapse of Bear Sterns sent shock waves up and down Wall Street and raised questions about financial firms’ ability to repay their loans.

UBS, it appears, had a vested interest in propping Lehman up with Principal Protected Notes — or loans —from its retail clients: On the day that Lehman collapsed, UBS issued a statement saying it had “no more” than $300 million in Lehman holdings.

UBS retail customers who purchased Lehman Principal Protected Notes appear to be the ones paying for UBS’ conflict of interest.