Naples, Florida – Vernon Healy is talking with investors throughout the US as well as international investors with potential claims relating to the sale of Lehman structured notes by UBS.
For example, a newly retired couple from the Midwest (winter residents of Southwest Florida) have retained Vernon Healy to represent them in their claim against UBS for gross misconduct. The couple were approached by their trusted brokers at the Bonita Springs branch of UBS to put both retirement money and inherited money into a new investment product – Lehman Brothers Principal Protected Notes.
Shortly after they purchased the notes, Lehman Bothers declared bankruptcy. The couple have now been offered less than three (3) cents on the dollar (i.e. less than 3% of the 2008 purchase price from a third-party buyer).
As investment professionals, UBS was well aware, or should have been well aware, that credit risk was an issue, especially since it sold the couple the Lehman notes after Bear Stearns’ collapse. After Bear Stearns’ insolvency crisis and near bankruptcy, UBS was well aware (or was recklessly ignorant) that credit risk had become an even greater concern for purchasers of structured notes. Nevertheless, UBS sold Lehman notes to these retirees.
Structured note sales have exploded recently in the U.S. as the brokerage industry discovered how much money they can make using a pitch that fails to adequately disclose the risks, complexity, and costs of these products. Instead, brokerage firms pitch the appealing "concept" of upside potential with downside protection.
The complexity of the product effectively conceals the flaws in the "concept" and hides the true risks from the investor. Brokerage firms’ own internal pitches to local financial advisors often emphasize the high commissions (usually in the range of 3%) and the short term of the products (which allows for recurring sales opportunities), while deemphasizing the risks (especially credit risk), diversification problems in overselling these products, outrageous internal costs and the regulatory requirements for pitching structured products to retail customers.
The result has been an explosion of structured notes sales to customers in the U.S. In 2004, approximately $32 million in structured notes were sold in the U.S. Within two years, in 2006, the amount of sales of structured notes had doubled to $64 million. The next year (2007), that number nearly doubled again to more than $110 million.
The retired couple in this article is the latest in a number of Lehman structured note investors who have turned to the Vernon Healy law firm for help in weighing their legal options, which include filing individual or group arbitration claims with the Financial Industry Regulatory Authority (FINRA).
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., REITs (Real Estate Investment Trusts), bonds and bond funds, TICs (tenancy in common), tax shelter products and strategies, program trading, land trusts, trustee malfeasance, subprime products, debt obligations, structured products such as ETFs and ETNs, pension and retirement funds, and other financial product and strategy issues.
