Failing to Communicate the Risks of Structured Products and Principal-Protected Notes
"Structured product" is a generic term used by brokers to describe a product that they claim has been structured to provide the safety and protection of a conservative bond investment or mutual fund while allowing the investor to enjoy the returns of stocks and derivatives. Principal-protected notes are one type of structured product.
Unfortunately there are two types of problems with structured product that lead investors to suffer tremendous financial losses:
- The structured products or principal-protected notes were not structured properly and therefore did not deliver the degree of safety or the return that was promised; and
- " The degree of risk associated with this type of investment was misrepresented to investors, who actually faced substantial risk of loss to their initial investment, particularly as many of these structured products had extensive exposure to the subprime mortgage market
The securities fraud attorneys at Dimond Kaplan & Rothstein, P.A. (DKR) currently represent a number of investors who lost money in Lehman Brothers structured products, including "100% principal-protected" notes. Our firm is pursuing securities arbitration claims against UBS Financial Services in an effort to recover those investment losses.
Do you have a case? Contact a lawyer experienced in investor fraud cases at our New York City, Los Angeles, Miami or West Palm Beach law office for a free initial consultation.
DKR lawyers represent investors in Florida and throughout the United States and Latin America in cases involving stockbroker misconduct, misrepresentation, fraud and violations of Securities Exchange Commission rules and regulations. While many of our clients clearly told their brokers that they were seeking safety for their investments, the complexity of structured products made it necessary for them to trust their broker. Unfortunately, even many investment professionals did not understand these products well. Therein lies the problem — and the financial liability.
The person or firm that sells the investment is responsible for knowing what is being sold and for properly disclosing all material facts and risks. They can be held financially liable for failing to do so. With complex securities like structured products brokers themselves often do not understand the product and are relying upon representations of others. This means there could be multiple culpable parties that had a legal duty to know about the product and to disclose accurate information regarding its risks.
- The brokerage firm could be responsible for failing to inform, train, or supervise the broker selling principal-protected notes.
- The investment bank that structured the product could be responsible for failing to disclose all facts and risks.
- The underwriter who drew up the prospectus or the issuer of the security (the borrower) could be responsible for disclosure errors or misrepresentation.
Advocating for maximum recovery of your investment losses
At DRK, our goal is to help our clients recover financially from investment losses they suffered from structured products in the stock market. We investigate structured product cases to identify all possible liable parties so our clients can maximize their financial recoveries. Our securities lawyers have recovered millions of dollars of clients' investment losses.
If you lost money in what you were told was a very safe investment, talk to a lawyer at DKR for a free initial consultation. Contact our Miami, Los Angeles, New York, or West Palm Beach law office. We represent investors in securities fraud and stockbroker misconduct cases nationwide. Call 888.578.6255 to discuss your claim.