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New Hampshire Securities Regulators Accuse UBS Financial Services, Inc. of Misleading Investors about Lehman Brothers Principal Protected Notes

Posted by: Jeffrey B. Kaplan
June 11, 2009
Topic: UBS Sales of Lehman Brothers Principal Protected Notes

New Hampshire securities regulators have accused UBS Financial Services, Inc. of unfair sales practices and failing to supervise its brokers who sold Lehman Brothers structured products, including so-called "principal protected" notes. Principal protected notes purportedly allow investors to participate in the gains of an index, a basket of indices, or a derivative while guaranteeing the return of the investors' principal at the maturity of the notes. The regulators accused UBS of exaggerating the safety of these Lehman Brothers products, which ultimately became virtually worthless when Lehman Brothers filed for bankruptcy protection in 2008.

The New Hampshire Bureau of Securities Regulation says that UBS misled investors when it represented that the Lehman Brothers products were safe during a time when Lehman faced massive exposure to securities tied to the imploding real estate market. UBS also is accused of failing to disclose Lehman's troubles. New Hampshire regulators stated that "UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions." New Hampshire regulators also stated that they believe that "[t]he methods by which UBS offered and sold the Lehman Brothers structured products to its clients constituted dishonest and unethical business practices."

UBS disputes the allegations, claiming that it did nothing improper when it sold the Lehman products to its clients.

Lehman Brothers filed the biggest bankruptcy in U.S. history in September 2008, claiming $613 billion in debt. The bankruptcy filing wiped out the value of the Lehman Brothers structured products, causing billions of dollars in losses to investors. Investors in the Lehman Brothers structured products now are unsecured creditors in the Lehman Brothers bankruptcy.

Miami, Florida-based law firm Dimond Kaplan & Rothstein, P.A. (http://www.dkrpa.com/) currently represents a number of UBS customers who lost money in Lehman Brothers structured products, including "100% principal protected" notes. The firm's clients invested in the products with the expectation that their principal was safe. But the undisclosed risks associated with these investments, namely Lehman Brothers' massive exposure to the declining real estate market, have caused Dimond Kaplan & Rothstein's clients to sustain significant investment losses. The firm is pursuing FINRA securities arbitration claims on behalf of its clients against UBS Financial Services in an effort to recover those investment losses.

Dimond Kaplan & Rothstein, P.A. is an AV-rated, nationally recognized law firm with extensive experience representing investors throughout the United States and Latin America in investment fraud and stockbroker fraud cases involving stocks, bonds, options, structured products, hedge funds, and mutual funds. If you suffered investment losses in Lehman Brothers structured products, including "principal protected" notes, please contact attorney Jeffrey B. Kaplan of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or jkaplan@dkrpa.com for a free case evaluation. You also may visit the firm on the web at http://www.dkrpa.com/ or http://www.investmentfraud-lawyer.com/.


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