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Articles Posted in Lehman Brothers

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Investors who suffered significant losses as a result of their auction-rate securities investment with Jeffries Group LLC may be able to obtain a recovery via FINRA securities arbitration. Jeffries Group is a subsidiary of Leucadia National Corp., another full-service brokerage firm. Recently, Jeffries was ordered to pay an investor $7 million regarding an auction-rate securities dispute.

In May 2012, a statement of claim was filed with the Financial Industry Regulatory Authority by Saddlebag LLC. The claim alleges that the firm wrongfully invested the client’s assets in illiquid auction-rate securities (ARS). According to securities lawyers, many financial firms sold auction-rate securities as short-term instruments with a highly-liquid nature, much like money market funds.

However, in 2008, the credit crunch resulted in a failure of the ARS market and investors with a piece of the $330 billion market were stuck holding securities that they were unable to sell. Other firms, including Morgan Keegan, have been accused of misleading investors regarding the liquidity risk of auction-rate securities.

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Investment fraud lawyers are currently investigating claims on behalf of customers of UBS Financial Services who were sold 100 Percent Principal Protected Notes. 100 Percent Principal Protected Notes were bonds or structured notes issued by Lehman Brothers Inc. Lehman Brothers declared bankruptcy in September of 2008, resulting in disastrous losses for many investors.

100 Percent Principal Protected Note Investors Could Recover Losses

Recently, a Financial Industry Regulatory Authority arbitration claim was filed on behalf of a Texas investor against UBS Financial Services. According to the Statement of Claim, UBS Financial Services allegedly sold the investor, who was a brokerage customer of the firm at the time, $300,000 of the 100 Percent Principal Protected Notes.

According to the claim’s allegations, UBS was aware of the deteriorating financial condition of Lehman Brothers, but concealed its views from brokerage customers who owned the notes. Furthermore, UBS customers were allegedly kept unaware that the Lehman Brothers notes could quite possibly default and become worthless. In addition, the claim alleges that the sales of Lehman notes were halted twice by UBS Financial Services because of concerns regarding credit risk, but UBS did not disclose these halts to thousands of its customers who were already invested in Lehman notes.

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Investment fraud lawyers are encouraging investors who suffered significant losses as a result of their investment in Lehman Brothers 100% Principal Protection Notes to thoroughly explore all their options for recovering losses. These notes, which have also been called “Principal Protected” notes, are not the only Lehman Brothers structured products being investigated by securities arbitration lawyers. Auto-call Notes and Return Optimization Notes are also being investigated on behalf of investors who suffered losses in these Lehman Brothers products.

Lehman Brothers PPN Investors to Explore Every Option

While many investors have filed claims in Lehman’s bankruptcy proceedings, it now appears that these individuals will receive only about 20 cents on the dollar for their investment losses. Investors must consider alternate methods of loss recovery, including filing a Financial Industry Regulatory Authority securities arbitration claim. Furthermore, investors will have to determine if any statute of limitations issues exist relating to their case.

Despite the fact that a class action lawsuit related to these notes has been filed, investors should be aware that they may only recover a nominal amount as a part of a class action lawsuit. It may, therefore, be in investors’ best interest to acquire a securities arbitration lawyer to file an arbitration claim on their behalf.

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As a significant number of gas prepayment bonds ratings have been downgraded by Moody’s Investors Service, stock fraud lawyers are advising investors to be cautious regarding their investments in these bonds. As a result of downgrades in Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co., Credit Agricole Corporate & Investment Bank, Merrill Lynch & Co., BNP Paribas, Morgan Stanley, Royal Bank of Canada and Societe Generale, numerous bonds became subject to review and subsequent downgrades.

Investors Beware as Gas Prepayment Bonds Downgraded by Moody

Securities arbitration lawyers say this situation is similar in some ways to what happened when, after Lehman declared bankruptcy, Series 2008A of Main Street Natural Gas Inc. Gas Project Revenue Bonds were downgraded. In the case of the Lehman bonds, the bonds were not guaranteed by Lehman Brothers, though certain payment obligations of the gas supplier were guaranteed.

The following is a list of gas prepayment bonds that have been affected by downgrades:

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Securities arbitration lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of their investments in Lehman Return Optimization Security Note and Maluhia Eight LLC.

Investors of Lehman Return Optimization Security Note, Maluhia Eight Could Recover Losses Through Securities Arbitration

Lehman Return Optimization Security Notes were allegedly marketed by brokers as investments designed to guarantee safety much like the safety associated with “capital preservation.” Furthermore, they were marketed as “low-risk investment,” according to investment fraud lawyers. However, the investment’s safety was actually dependent upon the solvency of Lehman Brothers, which acted as the issuer of the note. Following Lehman Brother’s September 2008 declaration of bankruptcy, investments such as this one that were backed by Lehman Brothers suffered disastrous losses. The potential liability of brokerage firms that sold the note to investors is now being investigated.

Brokerage firm liability for a Hawaii real estate deal, Maluhia Eight LLC, is also under investigation by securities arbitration lawyers. Chapter 11 bankruptcy was declared by Maluhia Eight in 2010 in the Northern District of Texas. Many investors have suffered losses as a result of the declaration of bankruptcy, but investors who purchased Maluhia Eight because of an unsuitable recommendation may be able to recover losses.

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Investment attorneys continue to seek investors who suffered significant losses in Lehman Brothers 100 Percent Principal Protection Notes and who wish to pursue securities arbitration claims in order to recover losses. Lehman Brothers 100 Percent Principal Protection Notes, also known as Principal Protected Notes, were issued by UBS Financial Services and have resulted in significant losses for many investors.

Securities Arbitration May be a Better Path for UBS Lehman Brothers 100% Principal Protected Notes Investors

Many claims have been filed on behalf of Lehman note holders in the Lehman bankruptcy proceedings, but there are many more investors who must take action if they wish to recover these losses. Though many investors hope to recover losses through the class action that has been filed, individual securities arbitration claims may prove to return a larger percentage of losses to investors. Based on the Third Amended Joint Chapter 11 Plan of Lehman Brothers, it appears that investors will only receive about 21 cents on the dollar through the class action lawsuit. Therefore, investors should attempt to recover losses by any means available to them, including securities arbitration. Furthermore, investors should act immediately due to potential statutes of limitations.

Customers of UBS Financial Services who suffered losses as a result of their investments in Lehman Brothers 100 Percent Principal Protection Notes are encouraged to contact a stock fraud lawyer immediately for more information about filing a securities arbitration claim with the Financial Industry Regulatory Authority’s Office of Dispute Resolution. One way to do this is to look for an attorney who is experienced at representing clients with these kinds of claims. You will want someone who knows the history of rulings relative to these claims, as well as someone who understands how to recover as much money as possible for his or her clients.

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Principal Protected Notes, or PPNs, are structured investments, meaning they connect the performance of commodities, equities, currencies and other assets to fixed income notes and CDs. PPNs are legitimate investments, though they have received a lot of negative attention lately. PPNs may have a full principal protection, but only partial principal protection is possible as well. In addition, PPNs can pay at their maturity in different ways, some paying a variable sum and others in coupons connected to a security or index. While PPNs are appropriate for many investors, there are risks associated with them.

Principal Protected Notes and the Lehman Brothers Debacle

The now infamous class action suit against Lehman Brothers has its roots in the claim that the risks associated with PPNs were not disclosed to investors. When Lehman Brothers filed for bankruptcy, the principal on the PPNs — for which Lehman was the borrower — became unprotected and investors were left with unexpected losses. According to claimants in the case, they were led to believe that as long as they held them to maturity, their PPNs were 100 percent principal protected. Claimants also say they were told that as long as their underlying indices maintained their worth, the PPNs were principal protected. Furthermore, the risks associated with PPNs were not disclosed and customers were not notified of the decline of Lehman Brothers which could affect the value of the investments.

The case against Lehman Brothers deals primarily with broker misconduct in misleading investors about the safety of their investments. However, if other allegations are true and firms truly pushed PPNs at the same time that they were reducing their own PPN holdings, it is a question outright broker fraud as opposed to failure to disclose.

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Once again, Wall Street insiders win and retail investors lose.

The outside advisers handling Lehman Brothers’ bankruptcy – mostly bankers and lawyers – have made over $1.4 billion for their services since Lehman Brothers went bankrupt three years ago.   If you’re a Wall Street insider, Lehman Brothers, which is bankrupt and out-of-business, is a fantastic place to work.

Meanwhile, investors holding Lehman Brothers structured notes are slated to get back only about one fifth of the money they invested in the notes when the Lehman Brothers bankruptcy litigation finally winds up.  Financial advisers at UBS and other brokerage firms peddled Lehman Brothers structured notes with great-sounding names like “100% principal protected” notes and “Return Optimization” notes.   But for investors getting back only twenty cents on the dollar, their principal wasn’t protected and their returns weren’t optimized.

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Both Lehman Brothers and UBS have had more than their fair share of bad press over the last three years, but are they cut from the same cloth? A recent article in Forbes makes the argument that they are. September marked the three-year anniversary of Lehman Brothers’ bankruptcy and the arrest of a UBS trader in London for fraud. When the world financial markets were shattered by the collapse of Lehman in 2008, many investors were left with annihilated life savings and retirement accounts.

Lehman Brothers, UBS and Wall Street Greed

Though it may appear that the most recent UBS incident and Lehman Brothers’ collapse are different events, according to Forbes’ article, “The players may be different but the rules are the same.” The “Delta One” trading desk used by the UBS trader and ETFs he was trading have a similar concept to the Lehman Brothers Principled Protected Notes sold by Lehman and UBS and both were excessively risky. Furthermore, UBS and Lehman worked cooperatively to dump the PPNs on investors, causing them significant losses.

Since the fiasco began, claimants been victorious in almost all securities arbitration cases against UBS and recovered their losses that resulted from the Lehman Structured Product Notes. However, criminal charges have not been brought against any Lehman executives, a measure of justice that is yet to be realized. According to an article in The New York Times, this is a case in which “brokers selling complex securities that they once contended were safe and sound have saddled individual investors with billions in losses since the credit bubble burst. Remember auction-rate securities? Those were peddled to investors as just as good as cash — until they no longer were after that market seized up in 2008.”

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Securities arbitration ended this month for a claim made by three clients against Neuberger Berman. The Financial Industry Regulatory Authority (FINRA) panel ruled on July 15th that Neuberger Berman must pay $5 million in damages, $450,000 in (3 percent annual) interest and $7,500 in legal fees. Investment attorneys stated that the financial award covered the investments of all three clients.

Three Investors Win $5.5 Million from Neuberger Berman

In 2008, the claimants were persuaded by broker Brian Hahn to invest in Lehman Brothers Structured Notes, named comBATS and XLF, despite the customers’ previous insistence to avoid any Lehman investments. According to investment attorney Alan Block, “The way the notes were sold it wasn’t clear that Lehman was the underwriter.”

Nicholas P. Lavarone, who also represented the claimants in securities arbitration, said, “The customers were all told that the principal of the structured notes were either fully protected or partially protected.” It was clear, however, once Lehman Brothers filed for bankruptcy and the structured notes became practically worthless, that Lehman was, in fact, the underwriter and they were neither fully nor partially protected. In addition to the structured notes, one of the claimants invested a sum of $1 million in a private-equity hedge fund named Libertyview Credit Select. The assets of this fund were lent to Lehman Brothers.

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