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UBS Class Action Lawsuit Filed over Lehman Brothers Structured Notes

  • Written by: AboutLawsuits
  • 53 Comments

A class action lawsuit has been filed against UBS Financial Services, Inc. on behalf of all investors who were sold Lehman Brothers structured notes, also referred to as Lehman principal protection notes, by the brokerage firm.

The Lehman Brothers structured notes were a hybrid financial instrument, constructed from a combination of stocks, bonds, currencies, commodities and derivatives, which were sold as low-risk and safe investments.

UBS and a number of other brokerage firms sold the structured notes to retail investors with guaranteed principal protection from Lehman Brothers, which means that investors were assured that they would at least receive their initial investment back.

When Lehman Brothers filed for bankruptcy protection on September 15, 2008, the guarantee that the principal would be protected became meaningless, and the Lehman notes are now essentially worthless.

Many investors have reported that they were sold these Lehman structured notes even during the months right before the bankruptcy filing, and they were provided no indication that the investment bank had a severely weakened financial position as a result of heavy investments in the subprime mortgage market.

The UBS class action suit was filed last week in the U.S. District Court for the Southern District of New York, on behalf of all investors who were sold Lehman Brothers Principal Protection Notes by the brokerage firm. The complaint alleges that UBS brokers made false and misleading statements that omitted material facts about the risk associated with investing in the Lehman structured notes.

The lawsuit seeks to cancel the UBS investors’ purchases of the Lehman Brothers notes, and to allow the investors to recover what they paid for the securities.

Similar cases are also being pursued as arbitration claims against UBS and other brokerage firms for recommending the notes without disclosing the full extent of the risk. The Lehman Brothers structured note arbitration claims are being reviewed by lawyers for investors who lost over $50,000, regardless of which brokerage firm sold the security.

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53 comments

  1. JT Reply

    I was with the same trusted financial advisor for about 10 years. Was always in conservative mutual funds or ETFs. Modest returns and rarely any losses even with the Dot Com buble bursting. He decides to move from the firm in Westchester and starts his own on Long Island at the same time moving all his clients’ money to UBS. Being an accountant, he states that there are tax dis-advantages to owning mutual funds. He reccomends individual homdings over mutual and ETFs.
    In addition to stocks, UBS puts me into “structured products” which I did not fully understand but he said they were 100% safe with the principal protected. Even as these were losing value he said to stick with them. Again, they were protected and guaranteed. After they were delisted, UBS and the advisor said that when litigation is complete, UBS would make up the amount lost, making the investors whole. For that reason only, my UBS account remains open with my 108k investment worth 9k. Both the investment advisor and UBS have ignored any inquiries about UBS making individual investors whole again. Not only is UBS liable for these “investments”, the “CFAs” who worked with UBS should be called to account for their erroneous advice. Those independent advisors who brought investors money to UBS’ table should share in the loses that UBS might have to bear.

  2. Victoria Reply

    My mom also invested with UBS and lost over 100,000.00 How do I find out what to do next?

  3. TM Reply

    Just like JT above I have been with the same financial advisor for about 14 years now. He too changed firms and went with UBS in Salt Lake City, moving my account to other funds including the Lehman PPN’s. My investment went from 61K to about 6K but I was assured by the advisor not to worry because UBS has been accruing money to make the investors whole. This making whole action, he says, will occur as soon as we receive the $0.26 on the dollar we are due from the settlements. He told me UBS has been holding off because they do not know exactly how much their clients are due. I feel like I am getting led on just like when I was advised to purchase the PPN’s, and intend to remove all my holdings from UBS (except the PPN’s) by the end of 2012 if they do not come through on their promises.

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