NAPLES, Fla., Sept. 15, 2010 (GLOBE NEWSWIRE) -- The investment fraud attorneys at Vernon Healy today filed another $4 million in claims against UBS (NYSE:UBS), alleging that the firm perpetrated securities fraud against investors who were sold Lehman products, including products that UBS promised were principal protected.
The multiple claims filed today were made on behalf of a cross section of investors including educators, trusts, retirees, business owners and entrepreneurs who've grown their businesses over a lifetime.
To date, Vernon Healy has brought close to $10 million in claims on behalf of retail investors who were sold Lehman principal protected notes. They allege that UBS knew full well that Lehman Brothers was in deep financial trouble while it continued to push Lehman products to Main Street investors.
These UBS-designed investment products supplied Lehman Brothers with an infusion of unsecured loans from Main Street investors as the housing market decline and credit crisis threatened Lehman Brothers' solvency, according to the claims. Contrary to sales pitches that represented that many of the Lehman structured products were principal protected, the Lehman Brothers bankruptcy in September 2008 left Lehman note holders standing at the back of the bankruptcy line as unsecured creditors, the claims say.
In order to sell the products, UBS disseminated misleading product descriptions to its financial advisors that emphasized the safety and security, according to the claims filed today. Actually, the notes were a highly complex and illiquid product designed by UBS that carried significant credit risk, the claims state. "Structured notes are very complicated products not fully understood by many financial advisors, much less retail investors," said Chris Vernon, founder of Vernon Healy. "Despite their complexity, at their core these products were for the most part nothing more than unsecured and illiquid medium term loans to Lehman."
The investors represented in the numerous filings today include a retired sales executive and other retirees, a retired and disabled educator, business owners and entrepreneurs, and trustees. With respect to some, these losses have had a dramatic effect on retirement nest eggs and personal financial security.
As the architect of these Lehman structured products, UBS knew of Lehman's precarious financial position, but UBS continued to urge its financial advisors through significant internal marketing to pitch Lehman principal protected notes, reverse convertible notes - referred to by UBS as Yield Optimization Notes - and other structured products related to Lehman, according to the claims.
Adding insult to injury, UBS was peddling Lehman products it knew were highly risky to investors at the same time it was reaping huge profits from much safer collateralized, high-interest, short-term loans it was making to Lehman, Vernon said. According to the claims filed today, UBS was profiting behind the scenes from Lehman's weak financial position while it continued to recommend Lehman structured products to its client base.
"UBS, like several other financial institutions on Wall Street, used its knowledge of Lehman's desperate financial situation to line its own pockets rather than protect its clients or the investing public," Vernon said. "Through the spring of 2008, UBS continued to charge Lehman shocking rates of interest for fully collateralized short term loans."
Vernon Healy is a Naples, Florida law firm that represents investors nationwide who are victims of stock fraud and stock losses due to broker fraud and brokerage firm fraud and misconduct. Vernon Healy's ongoing investigation of Lehman principal protected note sales in the United States has now expanded to sales of Lehman structured notes in Europe, as well as the sales of other types of structured products sold in the U.S, especially "reverse convertibles." Vernon Healy's investment fraud attorneys are experienced in arbitration and litigation, and the firm assists clients in attempting to recover losses caused by all manner of financial fraud and negligence. It focuses its practice on complex financial litigation and arbitration as well as other complex business litigation and arbitration.