Lehman Brothers emerged from bankruptcy on March 6, 2012 and is expected to begin making distributions to creditors on April 17, 2012. Those creditors include investors in Lehman Brothers "100% Principal Protection," "Partial Protection," "Step-Up Callable," "Return Optimization," and "Absolute Return Barrier" notes. Many of these investors purchased the Lehman structured products from UBS. Unfortunately, bankruptcy distributions likely will return only about 20% of investors' investment losses. For many investors, the only way to recover the remaining 80% of their investments losses is through a FINRA arbitration claim.
Investors in Lehman Brothers structured notes recently received a notice concerning potential distributions from the Lehman Brothers bankruptcy. These investors include those who bought so-called "100% Principal Protection" Notes. Investors must vote on the distribution plan by November 4, 2011. Investors affected by this notice include those who lost money as a result of UBS sales of Principal Protection Notes.
Time continues to run out for investors to file FINRA arbitrations
It was reported on September 1, 2011 that the judge in the Lehman Brothers bankruptcy has approved a plan by Lehman Brothers' bankruptcy estate to pay out about $65 billion to creditors. If creditors vote in favor of the distribution plan Lehman's bankruptcy is expected to end with payments being made to creditors as early as the beginning of 2012.
A FINRA securities arbitration panel recently ordered Neuberger Berman to pay approximately $5.5 million to three investors wholost money in Lehman Brothers' structured products. The investors lost their money when Lehman Brothers filed for bankruptcy protection in September 2008. The arbitration award represents a total return of the investors' losses.
In June 2011, a FINRA arbitration panel ruled that UBS Financial Services must pay an investor more than $2 million to compensate the investor for losses sustained in a Lehman Brothers principal protection note that UBS sold to the investor. This FINRA arbitration award marks yet another victory for investors who have claimed that UBS misrepresented the Lehman Brothers investments. Most of the FINRA arbitration cases that have proceeded to a final hearing have resulted in an award of damages to investors. It appears that arbitrators agree with investors and plaintiff lawyers who claim that UBS misrepresented the safety of Lehman Brothers principal protection notes.
On April 11, 2011, the Financial Industry Regulatory Authority (FINRA) announced that it fined UBS Financial Services, Inc. $2.5 million and required UBS to pay $8.25 million in restitution for conduct associated with UBS's sales of Lehman Brothers principal protected notes. Among other things, UBS was fined for misleading investors about the "principal protection" feature of 100% Principal-Protection Notes (PPNs) issued by Lehman Brothers Holdings Inc. FINRA's fine of UBS follows similar charges levied against UBS by New Hampshire securities regulators.
A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered UBS to pay $432,000 to two UBS customers who purchased Lehman Brothers structured products from UBS. The securities became worthless after Lehman Brothers filed for bankruptcy protection in September 2008. The FINRA arbitration panel also ordered UBS to pay more than $50,000 in attorneys' fees.
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.