The Securities Arbitration Law Firm of KlaymanToskes, announced that it is continuing to pursue securities arbitration claims against UBS Financial Services (NYSE: UBS) with the Financial Industry Regulatory Authority’s (“FINRA”) Office of Dispute Resolution on behalf of investors who sustained losses in Lehman Brothers 100% Principal Protection Notes.
The Securities and Exchange Commission (“SEC”) and FINRA issued an investor alert aimed at educating investors concerning the risks of structured notes with principal protection, and to help them understand how these complex financial products work. The retail market for these notes has grown in recent years, and while these structured products have reassuring names, they are not risk-free. FINRA and the SEC stated that they are “advising investors that structured notes with principal protection can have complicated pay-out structures that can make it hard to accurately assess their risk and potential for growth. Investors considering these notes should be aware that they could tie up their principal for upwards of a decade with the possibility of no profit on their initial investment.” It is estimated that since 2008, retail investors have lost about $113 billion in complex structured notes and derivative products.
In April, FINRA fined UBS $2.5 million and ordered the firm to pay $8.25 million in restitution, due to omissions and statements made that effectively misled some investors regarding the “principal protection” feature of Lehman Principal Protection Notes.
Some Lehman Note investors have filed claims in the Lehman bankruptcy proceeding and are hoping to recover their losses in the Notes through that process instead of filing an individual securities arbitration claim against UBS. It is unclear how long the bankruptcy will take, or whether investors will recover more than a nominal amount. Investors should avail themselves of all remedies in attempting to recover their losses, including, determining if they have to contend with any statute of limitations issues and/or filing a securities arbitration claim against UBS.
While a class action lawsuit has been filed relating to the Lehman Notes, KlaymanToskes reminds investors of the benefits of filing an individual arbitration claim, as opposed to participating in a class action lawsuit. In 2003, KlaymanToskes conducted a detailed study of securities arbitration versus class action. The study concluded that investors who file a securities arbitration claim traditionally obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit. To view the full results of the comparison, click here.