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UBS Sued for Lehman Note Losses: Zamansky Files FINRA Arbitration Claim on Behalf of Investors Sold Lehman Structured Notes

March 8, 2013 Blog

Zamansky LLC has filed a FINRA arbitration on behalf of a Pennsylvania couple alleging that their brokerage firm, UBS Financial Services, Inc., wrongly recommended that they purchase over $50,000 worth of structured products issued by the now-bankrupt Lehman Brothers in their individual retirement accounts. The case is FINRA No. 13-0622.

The Statement of Claim asserts that UBS senior management hid its true views of Lehman’s financial condition from its brokers and kept them “in the dark.” The claim alleges that UBS violated FINRA’s suitability rule by emphasizing the principal protection feature of the notes and downplaying issuer credit risk. The claim also alleges that UBS twice halted sales of Lehman notes in response to concerns about Lehman’s credit risk, but failed to disclose those halts to its thousands of retail customers who already held Lehman notes in their accounts. And finally, the claim notes that FINRA’s Department of Enforcement has issued findings concluding that UBS violated FINRA rules in connection with its sale of Lehman structured notes, fined UBS $2.5 million and required it to pay restitution to certain customers.

FINRA arbitration attorney Jacob Zamansky notes that “UBS sold about $1 billion worth of these risky, complex notes to thousands of their retail customers, we allege failing to disclose what could happen if Lehman defaulted. Many of these customers were very conservative and were looking to preserve their assets in a volatile market, but instead of conservative investments, UBS recommended these financially engineered products that generate healthy commissions for Wealth Management and substantial underwriting fees for the investment bank.” He added, “It’s a maxim in my business: structured products are never bought; they are always sold. Investors should beware of products that sound too good to be true, because they usually are.”

What Investors Can Do

If you would like to have your brokerage accounts reviewed or discuss your legal rights, you may, without obligation or cost to you, email or call the law firm at (212) 742-1414.

About Zamansky LLC

Zamansky LLC is one of the leading law firms specializing in securities fraud, FINRA arbitration and class action litigation. Our FINRA attorneys represent both individual and institutional investors. Our practice is nationally recognized for our ability to aggressively prosecute cases and recover losses.


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