Source: Vernon Healy Attorneys at Law
NAPLES, Fla., Nov. 6, 2008 (GLOBE NEWSWIRE) -- The Vernon Healy law firm is investigating legal options for investors around the country who purchased Lehman Brothers principal protected notes and structured notes.
These Lehman notes, which were typically pitched by brokers as safe investments that protected investors from losing their principal, today are mostly illiquid and trading for pennies on the dollar. According to a spokesman from SecondMarket, Lehman principal protected notes are selling for 10 to 14 cents for every dollar of principal invested.
"The tragic part of these cases is that the investors who are getting hammered are not big risk takers. They are typically conservative investors who were motivated by a sales pitch that focused on the safety and security of these complex products," said Naples securities attorney Chris Vernon.
"With respect to the product itself, the significant uptick in sales of these principal protected notes in the last couple of years is a classic case of certain major brokerage firms pushing their sales forces to dump these products onto their own retail customers as they come off the underwriting assembly line," Vernon said.
Through arbitration claims, Vernon intends to show the troubling conflicts of interest that existed between the best interests of the brokerage firms and the best interests of their retail clients who trusted the firms. Vernon also believes that, through cross examination in arbitration, it will become clear that many financial advisors did not have a genuine understanding of this complex product they were selling.
Unfortunately, it doesn't appear that these investments will benefit from government efforts to shore up the financial markets because these principal protected and structured notes were frequently tied to derivatives. The government announced in October that derivative products aren't eligible for government backing.
One investor who recently contacted Vernon Healy had the bulk of her nest egg in structured products on the advice of her broker. The broker made assurances that the account was fully diversified, most likely because the structured products were tied to a variety of indexes, despite the fact that most of the products were from Lehman. Thus, while the indexes to which the products were tied may have been diversified, the risk of repayment of the notes was heavily concentrated in a single company - Lehman.
The banks and brokerage firms who sold these products -- primarily UBS (UBS), Merrill Lynch (MER), Barclays (BCS) and Wachovia (WB) -- misrepresented the safety of these Lehman notes and neglected their duties to investors. According to Bloomberg, investors held more than $8 billion in Lehman structured notes as of September, with $2.8 billion of those sold in 2008.
Vernon Healy is helping investors weigh their legal options, which include filing individual or group arbitration claims with the Financial Industry Regulatory Authority (FINRA).
Vernon Healy is a Naples, Florida based law firm that assists investors nationwide in recovering significant losses caused by all manner of financial fraud and negligence in both court and arbitration. The firm handles a wide variety of business and investment related matters, including disputes involving various types of securities and investments (e.g., hedge funds, variable annuities, bonds, mutual funds, mortgage and debt obligations, pension and retirement funds, etc.) as well as disputes relating to business contracts, separation of business interests, real estate, banking, and insurance.
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