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Several FINRA Arbitration Panels Find in Favor of Investors in Lehman Brothers Principal Protected Structured Notes

One notable development for investors relates to several FINRA arbitration awards recently rendered against UBS Financial Services, Inc. (“UBS”) for sales practice abuses concerning UBS’s selling and marketing of principal protected structured notes issued by Lehman Brothers Holdings, Inc. (“Lehman Brothers”), which are structured investment vehicles that combine a fixed income note with a derivative typically linked to an equities index, a group of indices, or other assets. These products were developed, underwritten, offered, marketed and sold by UBS to its customers and investors as safe and principal protected investments; however, they were extremely risky and became worthless when Lehman Brothers filed for bankruptcy. Based on these claims, our firm has filed numerous arbitrations against UBS on behalf of investors and customers of UBS who invested in Lehman Brothers principal protected structured notes.

Several FINRA arbitration panels recently found in favor of investors and customers of UBS who invested in Lehman Brothers principal protected structured notes. Just this month, a panel ordered UBS to pay $432,000 in losses to investors who lost money invested in principal protected structured notes. UBS was also ordered to pay the claimants’ attorneys’ fees of $53,000, plus other expenses. Another securities arbitration panel ordered UBS to pay the claimant over $150,000 for losses on the basis of various allegations, including, but not limited to, fraud, breach of fiduciary duty and violation of South Carolina securities laws. Notably, UBS was also found liable to the claimants for attorney’s fees and costs. Another FINRA arbitration panel in Raleigh, North Carolina ordered UBS to pay over $108,000 in losses to investors who lost money invested in principal protected structured notes. In its Award, the arbitration panel expressly found that UBS was not liable solely because the product was issued by Lehman Brothers, which filed for bankruptcy. In a smaller award issued in December 2009, an arbitration panel awarded the claimants specific performance of rescission for their Lehman Brothers structured notes. Other arbitrations awards have also been issued in favor of claimants who have suffered losses in this product. Our review of FINRA’s arbitration awards indicates that all available arbitration awards concerning the Lehman Brothers principal protected structured notes have been rendered in favor of investors and against UBS.