Lehman Notes - Structured Products, Lehman Brothers Principal Protected Notes, Lehman Backed Bonds, Lehman Brothers Bankruptcy

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

Vernon Healy Attorneys at Law — Mon, 17 May 2010 14:16:51 -0700

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.

Lehman Brothers attempts to convert Archstone REIT deal debt

Vernon Healy Attorneys at Law — Fri, 07 May 2010 11:13:48 -0700

According to Reuters, Lehman Brothers is continuing its efforts to convert some of the $5 billion plus debt obligation from its 2007 leveraged buyout of Archstone Real Estate Investment Trust (Archstone REIT) into the equivalent of preferred stock and extend the repayment date on the balance of the debt.

As mentioned in an earlier commentary I wrote on the Lehman Brothers Bankruptcy Examiner's Report and the Repo 105 issue, this REIT deal was a bad one for Lehman Brothers. Industry insiders such as UBS and other firms knew it overexposed Lehman's balance sheet to the vagaries of the already precarious real estate market.

Most investors in Lehman Brothers Principal Protected Notes that were sold in the U.S. by firms such as UBS and Raymond James, and abroad by firms such as Citi and Credit Suisse, are looking to recover their losses through both claims against the sellers of these defective products and through mitigation efforts.

Claims against sellers include class action participation for smaller investors and FINRA arbitration for investors with more significant losses like those represented by our firm. Mitigation efforts by investors include efforts to recover a likely small portion of investors’ Lehman notes investment through either filing claims in the Lehman Brothers bankruptcy proceeding — for those willing to wait — or investigating possible sales of these notes on what now might be an now-emerging secondary market. Exploring the possibility of selling on a secondary market is for those who wish to recoup funds sooner than the bankrupcty timetable and are willing to recoup less than they might ultimately receive through the Lehman bankruptcy.

A cross section of Vernon Healy’s clients who have filed FINRA arbitration claims involving Lehman structured notes includes baby boomers, a teacher, a hospital employee, wealthy retirees, and a charitable foundation and reveals how aggressively and indiscriminately that firms such as UBS were encouraging their financial advisors to recommend Lehman Structured notes to their client base. Vernon Healy filed a $1 million arbitration claim against UBS on behalf of an investor in February and an $800,000 claim against UBS on behalf of another investor in March.

Investor wins again in Lehman note arbitration case against UBS

Vernon Healy Attorneys at Law — Wed, 14 Apr 2010 15:28:04 -0700

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 the Lehman bankruptcy in September 2008.

This FINRA ruling and growing number of big and small investors lining up to recover losses from UBS 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) 649-5394

email: info@vernonhealy.com

Lehman’s toxic assets no secret on Wall Street, Paulson says

Vernon Healy Attorneys at Law — Tue, 13 Apr 2010 01:45:54 -0700

Lehman Brothers’ disastrous balance sheet was not a secret to the insiders on Wall Street, reveals former United States Treasury Secretary Henry Paulson in his new memoir, “On the Brink.”

Yet this knowledge did not encourage anyone within UBS and other financial service firms from continuing to sell Lehman Brothers principal protected notes to thousands of main street investors around the world.

These investors believed their principal would be protected from losses, but when Lehman Brothers filed for bankruptcy in September 2008, it became apparent that the majority of their investment would be lost. Investors with high-dollar losses have been encouraged so far by awards in arbitration through FINRA, the Financial Industry Regulatory Authority, where Vernon Healy is representing investors from multiple states.

Vernon Healy is representing numerous Lehman Brothers principle protected notes investors, the majority of whom have losses well in excess of $500,000, in cases against UBS. Investors around the world – particularly from the U.K – who were affected by the collapse of Lehman Brothers have sought information about Lehman Brothers principal protected notes through Vernon Healy.

In “On the Brink,” Paulson describes Lehman Brothers as being “loaded with toxic assets worth far less than the value at which they were carried, creating a capital hole.” Paulson declines to accuse any specific executives of violating the rules, however.

According to Paulson, investment heavyweights on Wall Street were concerned with excessive risk taking in the markets and appalled by the erosion of underwriting standards. However, this did not change their behavior in terms of selling structured notes such as the Lehman Principal Protected Notes.

Paulson’s memoir indicates that some banks did not want an industry-backed rescue. “They knew that to make the math work, they would have to make a loan secured by assets worth much less than their stated value,” he writes.

This was the case at Lehman Brothers. There, a particular set of bad investments had been carried at $52 billion, but were later analyzed and estimated at closer to $27 to $30 billion.

Vernon Healy is representing multiple Lehman structured product investors in FINRA arbitration. Vernon Healy, a Naples, Florida-based law firm, represents investors nationwide 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 arbitration and litigation. The firm assists clients in attempting to recover losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

Lehman Bankruptcy Examiner's Report is more evidence that UBS wronged structured products investors

Vernon Healy Attorneys at Law — Tue, 30 Mar 2010 22:37:27 -0700

By Chris Vernon

The 2,200 page Lehman Bankruptcy Examiner’s Report issued in March is another nail in the UBS coffin in FINRA arbitrations involving Lehman principal protected notes and other Lehman structured notes. Although the Lehman Report deals with a lot of complex transactions and related terminology such as “counterparties” and “Repo 105,” at its core, it reveals additional wrongdoing by UBS that is both simple and disturbing.

Specifically, the Lehman Bankruptcy Report reveals that for much of the time that UBS was convincing its own clients to loan money to Lehman through Lehman principal protected notes and other structured products, UBS itself was loaning money to Lehman on far safer and far more profitable terms than the structured note loans.¹ 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.

As revealed by the Lehman Report, UBS acted as a “counterparty” to the now infamous “Repo 105” transactions. Effectively, by acting as a “counterparty” to the “Repo 105” transactions, UBS was making high interest loans to Lehman on a collateralized and very short term basis.² These loans kept Lehman’s toxic assets off the books just long enough for the company to pay off some debt, issue rosier quarterly reports in late 2007 and early 2008³ and then borrow more money to buy back the toxic assets.

Acting as counterparty, UBS was making a lot of money from loaning money to Lehman despite the fact that the loans by UBS to Lehman were short term and despite the fact that UBS received collateral to repay the loan in the event that Lehman defaulted. This arrangement is in stark contrast to the much longer term loans that UBS was simultaneously recommending that its own clients make to Lehman on a completely unsecured basis through Lehman structured notes.

UBS’s recent public statement that the Lehman Bankruptcy Report does not show that the “counterparties acted inappropriately” both highlights and misses the point in the context of UBS clients who were sold Lehman structured notes such as the Lehman principal protected notes. In contrast to the UBS public statement, the Lehman Bankruptcy Report is significant additional evidence that may lead FINRA arbitration panels to award punitive damages in favor of former UBS clients who bring claims against UBS relating to Lehman structured notes.

How outrageous was UBS’s behavior? While still selling Lehman structured notes to investors who have retained our firm and many others in March of 2008, UBS charged the now “desperate” Lehman a fee of $186 million on a very short term and fully collateralized multi-billion dollar loan. If this short term loan return were annualized, it would equate to a return to UBS of more than 150 percent 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.

The Vernon Healy Law Firm is now investigating whether UBS decided at some point that Lehman was in such bad shape that it should scale back on the “Repo 105” loans even though they were collateralized, short term, and lucrative. If such a scale back occurred, then an issue will be whether UBS took any similar action in 2008 to inform or protect its own structured note clients in connection with their exposure as lenders to Lehman.

Prior to the release of the 2,200 page Lehman Bankruptcy Examiner’s report in March 2010, UBS had already lost multiple FINRA arbitrations related to Lehman structured notes. Therefore, the information disclosed by the Lehman Bankruptcy report builds on an already troubling trail of Lehman red flags that were ignored by UBS, such as: Lehman’s status as the lowest rated of the investment banks; Lehman’s Archstone deal that was a disaster for the company⁴; Lehman’s illiquid balance sheet assets that rose 300 percent from 2006 to the first quarter of 2008⁵; Lehman’s underwriting of more mortgage-backed securities in 2007 than any other firm, resulting in a staggering percentage of Lehman’s overall equity being tied up in risky assets; and dramatic write-downs by Lehman.

A cross section of Vernon Healy’s clients with Lehman structured note claims, including baby boomers, a teacher, a hospital employee, wealthy retirees, and a charitable foundation reveals how aggressively and indiscriminately that UBS was selling Lehman Structured notes as late as late March 2008 — after the Bear Stearns melt down that rocked Wall Street and ignited panic among Wall Street insiders. This indiscriminate sale is further evidenced by the fact that individuals from overseas, especially the U.K. are now seeking to retain Vernon Healy to assist them in pursuing UBS in connection with the sale of Lehman Structured Notes.

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 (239) 649-5390
Toll Free: (877) 649-5394 (877) 649-5394
email: cvernon@vernonhealy.com
_______________

¹ Volume 3, page 880 footnote 3382 of the Examiners report. ²Id. at 976
³ Id. at 875⁴ Id. at 836
⁵ Id. at 836

Vernon Healy files $800,000 investor claim against UBS alleging deceptive sales of Lehman notes

Vernon Healy Attorneys at Law — Tue, 09 Mar 2010 07:04:55 -0800

The Vernon Healy investor advocacy law firm filed an $800,000 claim today against UBS and accused the brokerage of committing gross misconduct when it marketed and sold $800,000 worth of Lehman principal protected notes to a Houston businessman as a safe and conservative “principal protected” investment in November 2007.

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, according to the Vernon Healy claim filed today.

The claim, filed before FINRA, the Financial Industry Regulatory Authority, seeks compensatory and punitive damages against UBS on behalf of the investor. The Vernon Healy law firm has filed almost $2 million in claims against UBS on behalf of Lehman note investors in the past month alone.

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.

After Lehman declared bankruptcy, the Texas investor received his October 2008 monthly statement, which dropped the value of the investment from $818,000 to zero, the claim states. This complete loss of valuation was contrary to the representation by UBS that the structured product was “principal protected,” according to the claim.

As the architect of these particular Lehman structured products, UBS knew or should have known of Lehman’s precarious financial position, but UBS urged its financial advisors to sell Lehman principal protected notes as safe to their clients, according to the claim.

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, today’s claim states.

State securities regulators in New Hampshire have taken action against UBS for deceptive practices involving Lehman Brothers Asian Currency Basket Principal Protected Notes, the same product sold to the Texas investor filing today’s claim.

International investors, particularly from the UK, were pitched Lehman structured notes by affiliates of Credit Suisse, Citi Bank and UBS.

Vernon Healy is a Naples, Florida law firm that represents 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

Christopher T. Vernon, attorney at law

Susan R. Healy, attorney at law

(239) 649-5390
Toll Free: (877) 649-5394
email: info@vernonhealy.com

New Hampshire case against UBS involves same Lehman structured products as $1 million Lehman notes claim filed by Vernon Healy

Vernon Healy Attorneys at Law — Fri, 05 Mar 2010 11:19:41 -0800

A civil complaint filed in New Hampshire in 2009 involves the same sort of Lehman Brothers investment that is the subject of a $1 million claim filed in February by Vernon Healy.

Vernon Healy filed the claim on behalf of a Texas investor, a retired executive to whom UBS (NYSE: UBS) marketed and sold $1 million in Lehman Brothers principal protected notes. These notes were part of a Lehman Brothers’ so-called Asian Currency Basket Principal Protected Notes structured product.

Vernon Healy alleges that UBS committed gross malfeasance by representing these notes as safe, with 100 percent of the investor’s principal protected. In fact, the investment was a highly complex product designed by UBS that carried significant credit risk.

This deceptive practice is similar to what the New Hampshire securities regulators accused UBS of in June. According to the New Hampshire Bureau of Securities Regulation, UBS sold investors the same Asian Currency Basket notes and portrayed the securities as safe.

New Hampshire regulators further allege that UBS failed to caution investors about the potential risks of the Lehman Brothers structured products once Lehman Brothers began to experience financial problems.

“UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions. The safety of these products was exaggerated. We believe UBS engaged in unfair and unlawful sales practices when presenting these investments,” Jeff Spill, Deputy Director of Securities Regulation Enforcement, said in a statement when announcing New Hampshire’s case against UBS in June.

With the September 2008 bankruptcy of Lehman Brothers, many who invested in the company’s principal protected notes are likely to lose the majority of their investments. The Lehman Brothers bankruptcy is the largest such collapse in United States history, with more than $600 billion in debt.

According to Vernon Healy’s February claim, UBS was one of the architects of these Lehman Brothers structured products, and thus knew or should have known of Lehman Brothers’ troubled financial position. Yet UBS encouraged its financial advisors through internal “road shows” to pitch Lehman Brothers principal protected notes to their clients.

These UBS-engineered investment products served to infuse Lehman Brothers with unsecured loans from main street investors, even as the housing market declined and the credit crisis threatened Lehman Brothers’ solvency, according the Vernon Healy claim.

The Vernon Healy law firm is representing multiple Lehman Brothers principal protected notes investors in multiple states in cases against UBS. Most of these investors suffered losses in excess of $500,000. Vernon Healy is also investigating the sale of these Lehman Brothers structured products by the Florida-based brokerage firm Raymond James.

Since Vernon Healy launched its investigation almost 18 months ago, investors from around the world, especially in the UK and elsewhere in Europe, have approached the firm for information about Lehman notes. Many of these international investors were pitched Lehman structured notes by affiliates of Credit Suisse or Citi Bank as well as UBS.

Vernon Healy is a Naples, Florida based law firm that is representing multiple Lehman structured product investors in FINRA arbitration. Vernon Healy securities attorneys represent investors who are victims of stock fraud and stock losses due to broker fraud and brokerage firm fraud and misconduct. The firm assists clients in attempting to recover losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

Lehman notes and bonds hurting local governments

Vernon Healy Attorneys at Law — Thu, 25 Feb 2010 12:29:15 -0800

The Lehman Brothers bankruptcy more than a year ago is old news to most Americans, but aftershocks from the largest bankruptcy in history continue to affect local governments across the country. Municipalities that tried to avoid risk by buying highly rated Lehman products now find themselves holding products that are now nearly worthless, according to the Wall Street Journal.

The casualties – dozens of school districts, cities and counties – lost more than $1.7 billion in the Lehman collapse. And for them, the pain from those losses continues.

Nowhere is that more true than in San Mateo, Calif., a municipality of 735,000 residents near San Francisco that saw the largest loss from the bankruptcy. Following the September 2008 collapse of Lehman Brothers, San Mateo saw $155 million vanish, the Wall Street Journal reported.

According to the Journal:

The county’s investment pool had purchased highly rated Lehman bonds and Lehman notes, but these are now trading at roughly 20 cents on the dollar. Making matters worse, the loss caused by Lehman Brothers’ collapse came on the heels of deep budget cuts at the state level that had been brought by California’s financial woes.

The one two punch meant plans for capital investments for San Mateo’s schools, community colleges and the county were scrapped. Teachers have been laid off and the county has scaled back its commuter rail service. For the first time in its history, San Mateo will have mass layoffs this spring, cutting hundreds of jobs.

The sad thing about San Mateo is that it is not an isolated case. Municipalities across the country have suffered similar fates but have seen no sign of relief from the government.

Local government leaders who sought a share of TARP funds were granted concessions in the writing of the bill but so far have seen no money. President Obama’s Treasury Secretary Timothy Geithner has refused to release TARP funds to make municipalities whole. Treasury officials say the request, while well intentioned, would lead to a flood of such requests from other investors.

Vernon Healy is representing investors with large Lehman losses on structured products and Lehman principal protected notes in FINRA arbitration. As the Wall Street Journal article shows, it’s not only individual investors who’ve been hurt by Lehman products but also local government taxpayers.

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) 649-5394

email: info@vernonhealy.com

Vernon Healy files $1 million Lehman Principal Protected Notes claim against UBS on behalf of Texas investor

Vernon Healy Attorneys at Law — Tue, 16 Feb 2010 07:53:25 -0800

Naples, Florida – UBS committed gross malfeasance when it marketed and sold $1 million in Lehman principal protected notes to a retired executive that may now be virtually worthless, according to a claim filed today by the Vernon Healy investor advocacy law firm that seeks compensatory and punitive damages against UBS.

Written material obtained by Vernon Healy as part of its pre-filing investigation shows that UBS (UBS) disseminated misleading product descriptions to its financial advisors that portrayed the Lehman notes as safe investments with 100 percent of the investor’s principal protected and none at risk, according to the claim filed today on behalf of a Texas investor.

Actually, the notes were a highly complex product designed by UBS that carried significant credit risk, the claim states.

These UBS-designed investment products supplied Lehman Brothers with an infusion of unsecured loans from main street investors as the housing market decline and credit crisis threatened Lehman Brothers’ solvency, according to the claim. The Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing in line as unsecured creditors.

As the architect of these Lehman structured products, UBS knew or should have known of Lehman’s precarious financial position, but UBS urged its financial advisors through internal “road shows” to pitch Lehman principal protected notes as safe and principal protected to their clients, according to the claim.

State securities regulators in New Hampshire have taken action against UBS for deceptive practices involving the notes, so-called Lehman Brothers Asian Currency Basket Principal Protected Notes, that were the very same product sold to Vernon Healy’s Texas client filing today’s claim.

The Vernon Healy law firm is representing multiple Lehman Brothers principal protected notes investors in multiple states — most of whom have losses well in excess of $500,000 — in cases against UBS. Vernon Healy is also investigating the sale of these Lehman structured products by the Florida-based brokerage firm Raymond James.

Since launching its investigation more than a year ago, investors from all over the world — particularly from Europe — have sought information about Lehman notes through Vernon Healy. Many of these international investors were pitched these Lehman structured notes by affiliates of Credit Suisse or Citi Bank as well as UBS.

Vernon Healy is a Naples, Florida based law firm that is representing multiple Lehman structured product investors in FINRA arbitration. Vernon Healy represents 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 arbitration and litigation. The firm assists clients in recovering losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

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) 649-5394

email: info@vernonhealy.com

Vernon Healy files Lehman Principal Protected Notes claim against UBS on behalf of Naples surgery assistant

Vernon Healy Attorneys at Law — Tue, 16 Feb 2010 07:42:23 -0800

Naples – UBS was negligent in its handling of a Naples surgery assistant’s retirement nest egg when brokers from the firm recommended risky investment products such as Lehman notes while failing to reveal the true level of credit risk, according to a claim filed today by the Vernon Healy Law Firm.

Despite being reassured by her broker at the UBS office in Bonita Springs that the principal of her investment was safe and, according to firm literature, the structured products were subject to “rigorous ongoing due diligence,” the 49-year-old hospital worker, lost almost $60,000 of her retirement savings. She ended up with a retirement account that consisted entirely of auction rate securities and structured products, including now virtually worthless Lehman Brothers structured notes, according to the claim.

The Lehman structured notes, a complex investment product designed by UBS, are difficult to understand but nonetheless were pushed to the client even though she instructed her UBS financial advisors to set extremely conservative goals and target principal protected investments.

Vernon Healy’s client did her best to protect herself from investments that might threaten her retirement nest egg and balked at initial recommendations from her UBS brokers that seemed too risky, according to the claim. Instead, she instructed her UBS broker to “park” her money until she decided a direction. The broker then recommended and bought the risky auction rate securities and structured notes.

UBS paid more than $22 billion in a December 2008 settlement to repurchase the auction rate securities from investors such as Vernon Healy’s client. But the firm remains responsible for its reckless advice that landed her with nearly $200,000 in risky structured products.

UBS is complicit in this grossly negligent advice and marketing to Vernon Healy’s client because it failed to warn brokers about the growing risk of structured products, the claim states. UBS strayed from its mission to put the investor’s needs above its own by failing to point out the riskiness of these investments.

The firm went so far as to hold trainings during which it encouraged brokers to aggressively market the structured products despite numerous red flags related to the credit crisis and the housing market meltdown. Despite these warning signs, UBS continued to promote and sell Lehman structured products to its customers, including Vernon Healy’s client.

The terms “principal protected” and “guaranteed return of principal” were used in the marketing of structured products because, when combined with the excessive complexity of the coupon payment formulas, they were effective at obscuring the substantial credit risk in the products. Because principal protected notes purported to guarantee principal, they were easy to market to investors seeking low risk investments, the claim states.

"Principal protection" means nothing if the note issuers are unable to meet their obligations. Structured product investors essentially made unsecured loans to different issuing banks, including the now bankrupt Lehman Brothers.

By late February 2008, when UBS sold Lehman structured notes to Vernon Healy’s client, UBS was well aware of the effect of the credit crisis on the financial sector in general and Lehman in particular, according to the claim.

Lehman’s 2007 fourth quarter earnings were down; the credit market crisis caused staggering total write-downs of $3.5 billion during the quarter with more write-downs expected. Faced with increasing borrowing costs in 2007, Lehman stepped up its issuance of structured products because it was in desperate need of raising funds in order to maintain liquidity.

Securities attorneys Chris Vernon and Susan Healy represent numerous Lehman notes investors in multiple states and have received international media attention for the firm’s Lehman notes investigation. Today’s claim comes on the same day the firm filed a claim on behalf of a Texas executive who lost $1 million on Lehman principal protected notes that are now virtually worthless.

Vernon Healy is a Naples, Florida based law firm that represents investors who are victims of stock fraud and stock losses due to broker fraud and brokerage fraud. Vernon Healy attorneys are experienced in securities arbitration and litigation. The firm is currently representing multiple Lehman structured product investors in FINRA arbitration.

The firm assists clients in recovering losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as business and commercial litigation.

For more information, contact:
Susan Healy, attorney at law
Christopher T. Vernon, attorney at law
http://www.vernonhealy.com
http://www.protectinginvestors.com

(239) 649-5390
Toll Free: (877) 649-5394
email: info@vernonhealy.com