Protecting Investors - Securities law attorneys investigating financial fraud and Wall Street misconduct involving Lehman Brothers, non-traded REITs, bonds, ETFs

Vernon Healy law firm files claim for more than $900,000 against UBS on behalf of charitable trust that invested in Lehman notes

Naples, Fla. — UBS engaged in gross misconduct when it marketed more than $900,000 in Lehman notes to a charitable trust as a safe and “principal protected” investment after public warning signs about Lehman Brothers’ financial solvency had surfaced, according to a claim filed today by the Vernon Healy law firm. 

The charitable trust, which gives to environmental causes, the arts and youth programs, stands to lose more than a $1 million on Lehman notes and other structured products sold to it by UBS. 

According to the UBS sales pitch, principal protected notes would return the entire original principal investment back to the investor even under a worst case scenario.  However, the notes were in fact risky, unsecured loans to Lehman Brothers, according to the claim. 

When an issuer goes bankrupt, as Lehman Brothers did, holders of structured notes are left standing at the back of the line with other unsecured creditors and they may recover little, if anything, of their original investment.

Structured products, including principal protected notes, were initially sold only to institutional investors.  More recently, major brokerage firms, including UBS (UBS), Merrill Lynch (MER), Barclays (BCS) and Wachovia (WB), have pushed their sales forces to dump these products on their own retail customers, said securities attorney Chris Vernon.

As early as 2005, industry regulators from the Financial Industry Regulatory Authority (formerly known as the NASD) raised concerns about the way that complex structured products, including structured notes, were being marketed to individual investors.  At least one European country has outlawed the recommendation of structured products to retail investors.

In the case of the charitable trust, the UBS investment advisor urged the purchase of Lehman notes in February and March, 2008, after significant concerns about Lehman’s creditworthiness surfaced within the investment world that UBS operates, according to the claim.

In fact, UBS sold the trust more than $600,000 in Lehman notes after the collapse of Bear Sterns and Lehman’s 2008 first quarter report raised concerns in the financial industry about its balance sheet.  As investment professionals, UBS was well aware, or should have been well aware, that credit risk was an issue when it sold the Lehman notes, the claim asserts.   

The Vernon Healy law firm is helping multiple Lehman structured note investors weigh their legal options, which include filing individual or group arbitration claims with the Financial Industry Regulatory Authority (FINRA). 

Through formal claims, the Vernon Healy law firm intends to show that conflicts of interest led UBS to misrepresent and inappropriately recommend Lehman notes and other structured notes to a wide variety of its trusting base of retail clients.

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 handles a wide variety of business and investment related matters, including disputes involving various types of securities and investments — e.g., hedge funds, TICs (tenancy in common), bonds, variable pre-paid forward contracts,  mortgage and debt obligations, pension and retirement funds.
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For more information, contact:
Christopher T. Vernon, attorney at law
Susan R. Healy, attorney at law
http://www.vernonhealy.com
http://www.protectinginvestors.com
(239) 649-5390
Toll Free: (877) 649-5394
email: acostanzo@vernonhealy.com

Lehman bankruptcy information for owners of Lehman notes and other Lehman structured products

If you own Lehman Brothers structured products, the Bankruptcy Court makes it easy for you to file your claim in the Lehman bankruptcy proceedings.  You may file your own proof of claim, or have your attorney file a claim on your behalf, but you also have a convenient alternative.

Wilmington Trust Company will represent the interest of investors who own Lehman structured products — including Lehman Principal Protected Notes — by filing a global claim in the bankruptcy.  In order to participate, you just need to complete the one-page Trustee’s Mailing Matrix and send it to Wilmington Trust.  If you own Lehman structured products (sometimes referred to as Lehman notes), you should have already received your copy of the Trustee’s Mailing Matrix in the mail.  However, if you do not have your form, click on the link at the bottom of this article to download a copy. 

You will need the following information in order to complete the Matrix form: 

• The name of your broker or investment advisor

• A list of the products you own, including the amounts and the CUSIP numbers.  CUSIP (Committee on Uniform Securities Identification Procedures) numbers are unique identifying codes that are assigned to all securities.  CUSIP numbers for individual products can be found on trade confirmations, which are the notices you receive when you buy or sell a security. 

It is too early to know how much, if anything, Lehman notes and structured products investors will recover in the Lehman bankruptcy.  At this point, it is not even clear what priority structured notes and other structured products will be given.

Ordinarily, structured product holders should have the same priority as bond holders; however, the bankruptcy court could decide to treat structured product claims differently.  One reason for differentiating between bond holders and structured product holders is that while a value can be readily established for bonds, structured products had no established price prior to maturity.   

Vernon • Healy recommends that Lehman structured product holders pursue all their recovery options.  In addition to filing a bankruptcy claim, investors with small claims should consider participating in the class action (which means timely completing and returning the class action claim forms). 

Vernon • Healy represents investors with larger losses who will likely fare better by pursuing their claims on an individual basis, as opposed to participating in the class action.  Click here to read more about Vernon • Healy’s efforts on behalf of individual investors with larger claims and click here to read more about the firm.   

Click here to download the Trustee’s Mailing Matrix.

California investor rights attorney Thomas Mauriello, of the Shine-Vernon legal team, files claims on behalf of Schwab YieldPlus Fund (SWYSX) investors with more than $200,000 in losses

San Francisco, California — Three California retirees with principal losses totaling over $200,000 filed claims today against Charles Schwab & Co. and its former high-profile fund manager, Kimon Daifotis, asserting that Schwab deceptively marketed its Schwab YieldPlus Fund as a “cash alternative” with safety comparable to that of 1 and 2-year certificates of deposits.  

The Schwab YieldPlus Fund, (SWYSX), which was marketed to investors as a safe, ultra short-term bond fund, actually contained high concentrations of mortgage- and asset-backed securities that exposed fund investors to the risk of substantial losses of principal, the claim asserts.

“The Schwab YieldPlus Fund was significantly riskier than Charles Schwab represented,” said Thomas D. Mauriello, a California investor rights attorney who filed today’s claim along with former SEC enforcement attorney Thomas Shine and investor rights attorney Christopher Vernon.

Mauriello noted that shares of other ultra short-term bond funds lost less than 2 percent of their value, on average, from June 30, 2007 to June 30, 2008.  During that same time, Schwab YieldPlus Fund shares dropped 31.62 percent — a loss that was more than double the decline of the S&P 500 Index for the relevant period.

“The Schwab YieldPlus Fund is virtually alone among its peers in exposing conservative investors to these kinds of steep losses of principal,” Mauriello said.

Moreover, Schwab profited handsomely from its deceptive marketing of the Schwab YieldPlus Fund to conservative investors as the fund experienced tremendous growth, according to the claim.

From 2003 to 2007, Charles Schwab Investment Management, a wholly-owned subsidiary of parent Charles Schwab Corp., saw its annual management fees of the Schwab YieldPlus Fund grow by 600 percent, the claim states. Schwab earned management fees of $76 million during that time, as the fund grew to peak net assets of $13.5 billion on July 31, 2007.   

By May 31, 2008, the fund’s net assets had plunged by more than 96 percent to $507 million. 

This risky investment composition of the Schwab YieldPlus Fund by fund managers compromised the fund’s liquidity and forced it to sell off asset-backed and mortgage-backed securities at distressed prices as more and more investors sought redemptions beginning in August 2007, the claim asserts.    

One of the retirees who filed a claim today, a 69-year-old widow from Rio Vista, California, thought her investment in the Schwab YieldPlus Fund was virtually the same as a money market fund investment based on the representations of her Schwab investment advisor, the claim states.

Also filing a claim today was a retired couple from Solvang, California who lost approximately $166,000 of their principal investment in the Schwab YieldPlus Fund.

Securities fraud litigators in the Shine-Vernon legal team have now filed claims on behalf of both corporate and individual Schwab YieldPlus Fund investor clients in California, New York, Texas, Florida, Missouri, Minnesota, Illinois and Hawaii, and they are currently investigating claims on behalf of investors in multiple other states. The team includes former SEC enforcement attorneys, former federal and state prosecutors, and investor rights attorneys from California, New York, Florida, Texas and Illinois.

Contact:
— Christopher T. Vernon, an investor rights attorney who represents investors throughout the United States (Florida, 239-649-5390, www.vernonhealy.com) — Thomas D. Mauriello, an investor rights attorney who represents investors throughout the United States (California, 888-612-1961, www.maurlaw.com);
— Thomas F. Shine, a former Securities and Exchange Commission (“SEC”) Division of Enforcement attorney (Florida, 800-838-8320, www.thomasfshinelaw.com);
Keywords: Schwab YieldPlus Fund, Yield Plus, SWYSX, SWYPX, Charles Schwab, investor losses, safety, securities attorney, arbitration, settlement.