Add Lehman Principal Protected Notes to the list of toxic investments sold to unsuspecting investors . The structured notes were issued by Lehman Brothers. They were marketed and sold to Main Street investors by UBS not as junk bond equivalents to be purchased with funds reserved for speculation, but as a a good choice for the fixed income portion of retirement accounts. UBS told clients that the principal amount of the notes was protected from loss (hence the name"Principal Protected"), and the only variable would be the amount of interest the notes would earn. UBS neglected to tell its clients that the notes were subject t o credit risk, and to the financial well being of Lehman Brothers. When the credit markets faltered, and when Lehman filed for bankruptcy on September 15, the Principal Protected Notes became virtually worthless. Investors who thought they were investing in risk free cash equivalents -- which they never would have heard of if UBS had not recommended them -- lost millions.
UBS does not contend that it did not see this coming. The Structured Products Association, whose members include UBS, was reported in Bloomberg News on November 3 as saying that investors have only themselves to blame, because warnings appeared in the prospectus for the product. Shame on them. Financial advisors who recommend investments as safe cash-equivalents should not make such statements if they are untrue, regardless of what a prospectus may disclose. After all, FINRA registered brokers are all held to the professional standard of commercial honor and just principles in the conduct of their business.
We would like to ask UBS and the Structured Products Association why anyone should bother hiring a brokerage firm or financial advisor if they cannot rely on their descriptions of investment products? Whatever happened to "You and US. UBS.?"
If you were the victim of a Lehman Protected Note sale, contact Banks Law for a Free Evaluation.