by Brian Mahany
A husband and wife brought action against UBS Financial Services after purchasing “Principal Protected Notes” issued by Lehman Brothers. According to the complaint, these notes supposedly combined the safety of a fixed income investment with the potential to make more based on stock market performance. Although the concept sounds good, the notes were anything but safe.
Lehman Brothers was the sole guarantor of the notes. With the bankruptcy of Lehman, the notes became essentially worthless.
Principal Protected Notes (“PPN’s”) have been around for years. Only in recent years, however, have they developed a retail following. In 2005, the Financial Regulatory Authority recognized the risks associated with PPN’s and specifically told broker dealers to be careful of their sales practices. Member firms were told not to portray the notes as safe or conservative investments.
How many of these notes were issued? Industry experts say $120 billion by 2007, half in the hands of individual investors.
Many brokers did caution investors about the risks of these investments. UBS apparently did not. Not only was UBS recently ordered to pay $2.2 million to a husband and wife who purchased these notes, the State of New Hampshire has charged the company with “dishonest and unethical business practices” surrounding the sale of the principal protected notes.
According to some of the complaints against UBS, brokers there told investors the principal was “100%” protected. UBS continued to do so even after Lehman’s financial condition began to crumble. UBS denies the allegations and expressed regret at the most recent decision.
A 3-person FINRA panel issued the decision.
What should you do if the victim of bad investment advice? Contact a lawyer experienced in securities litigation and FINRA arbitrations.
Mahany & Ertl is a full service law firm that helps victims of fraud recover their hard earned money. Our securities lawyers and asset recovery lawyers have helped people across the U.S. With offices in Milwaukee, Wisconsin; Detroit (Birmingham) Michigan and Portland, Maine, we can help if you are the victim of unsuitable investments, bad brokers or faulty legal advice.
We have a former FINRA panelist on our legal team; experience not found in most in law firms. For more information and a no obligation, no nonsense consultation, contact attorney Brian Mahany. Brian can be reached at (414) 704-6731 (direct) or through the firm’s website, https://www.mahanyertl.com