Six attorneys hired to represent clients in the cases say UBS brokers touted the so-called structured notes as low-risk investments and failed to emphasize they were unsecured obligations of Lehman, which filed for bankruptcy in September. State regulators are fielding so many calls about Lehman’s notes they’re considering a task force to investigate the sales, said Rex Staples, general counsel for the North American Securities Administrators Association Inc., a group of 67 state and provincial regulators based in Washington.
Structured notes, sometimes marketed as “structured equities” or “hybrid financial instruments,” are constructed by banks and Wall Street firms from a combination of bonds, stocks, commodities, currencies and derivatives. About a third of the $114 billion sold last year in the U.S. promised full or partial principal protection.
Worth 14 Cents
UBS, the fifth-biggest brokerage firm in the U.S., sold about $1 billion of Lehman’s structured notes in America. The largest brokerages — Merrill Lynch, Citigroup’s Smith Barney and Morgan Stanley — weren’t big distributors of Lehman’s notes because they mostly sell their own products, said a person with knowledge of the matter.
Lehman’s Sept. 15 bankruptcy leaves holders of the notes waiting in line with other senior unsecured creditors for what’s left of their money. Notes with full principal protection are trading at 10 cents to 14 cents on the dollar, according to New York-based SecondMarket, which provides a marketplace for securities that are illiquid, or barely trade.
Scott Silver, an attorney in Coral Springs, Florida, said he was hired by more than 40 clients after he issued an Oct. 8 press release announcing his willingness to investigate claims on behalf of buyers of Lehman structured notes. Some investors had read stories about the Hong Kong claims, he said.
“People are livid,” Silver said. “They feel that the investment was misrepresented to them. They didn’t appreciate that it was tied to the credit risk of Lehman Brothers.”
For additional information or to further discuss these matters, investors should contact:
Scott L. Silver, Esq.
Blum Law Group
1-877-STOCK LAW (1-877-786-2552)
Blum Law Group is a nationally-recognized securities law firm headquartered in South Florida, with a satellite office in New York, representing investors worldwide with their claims for losses due to stockbroker misconduct and brokerage firm negligence in securities litigation and arbitration matters. The firm has successfully recovered multi-million dollar awards for its clients against the country’s top brokerage houses.