NEW YORK, April 19, 2011 (GLOBE NEWSWIRE) -- Attorney Christopher J. Gray of the Law Office of Christopher J. Gray, P.C. in New York City (newcases@investorlawyers.net) has the following comment concerning the terms of a Financial Industry Regulatory Authority (or FINRA) settlement with brokerage firm UBS Financial Services (a unit of UBS AG (NYSE:UBS)) concerning UBS's sale of so-called 100% Principal-Protection Notes" (or PPNs) issued by the former Lehman Brothers Holdings:
This inadequate settlement follows a familiar pattern wherein a regulator imposes a fine representing a small portion of the potential penalty that could have been levied, and then declares victory and moves on to the next case. The investing public deserves better from FINRA, which is supposed to be the regulator with primary responsibility for protecting public investors. Unfortunately, FINRA continues to underperform when it comes to putting teeth in its sales practice-related enforcement activities.
In its enforcement proceeding, FINRA had alleged that some of UBS's financial advisors did not understand the PPNs, including the limitations of the so-called "principal protection" feature. Consequently, certain financial advisors allegedly communicated incorrect information to their customers, and certain UBS advertising materials allegedly had the effect of misleading customers regarding the characteristics and risks of the PPNs.
The FINRA settlement resulted in UBS agreeing to pay a fine of $2.5 million, and required UBS to pay $8.25 million in restitution for alleged omissions and statements its personnel made that allegedly misled some investors regarding the "principal protection" feature of 100% Principal-Protection Notes that Lehman Brothers Holdings Inc. issued prior to its September 2008 bankruptcy filing.
However, the $8.24 million restitution fund is available only to limited class of purchasers of the PPNs from UBS. To be eligible for restitution, investors must have both a) listed their financial risk tolerance as conservative or moderate on UBS account forms; and b) purchased the PPNs during a three and one-half month period between March 2008 and June 2008. Investors who did not list these risk tolerances or who purchased at other times are not eligible for any payment in connection with the settlement. The full terms of the settlement and available restitution are accessible on the Firm's blog at www.investorlawyers.net.
Law Office of Christopher J. Gray, P.C. represents an investor in a substantial claim arising out of the sale of PPNs and is investigating possible arbitration claims on behalf of other investors in connection with the PPNs and other Lehman Brothers-issued securities. The Firm offers a confidential no-obligation consultation for investors who believe that they may have a valid claim arising out of investments in PPNs and other Lehman Brothers-issued securities. The Firm's contact information is below.