We Previously Reported that Ubs was Ordered to Pay $529,688 to Investors Who Owned Lehman Principal Protected Notes…………………Now For The Rest Of The Story

On November 3, 2010, UBS lost big in a FINRA arbitration case ordering them to pay $529,688 to investors who owned Lehman Brothers Holdings structured products. The principal protected notes were marketed and sold to investors by UBS as a risk free investment vehicle that would return their entire invested amount in the Lehman Notes at maturity. Customers were not properly informed of the attendant risks involved with the Lehman Notes, specifically the credit risk of Lehman Brothers. Unfortunately, the representations of the investment being safe and risk free proved to be wrong, since the notes were nothing more than unsecured Lehman debt, which are now worthless.

The principal protected notes were sold to a retired couple by Brett Coltman, their UBS broker, just a month before Lehman collapsed. The retired couple that had owned a plumbing supply company purchased $3.5 million worth of structured products between 2006 and 2008. The Lehman notes were called “100% Principal Protected Notes” and the Coltman’s had purchased $529,688 worth in August 2008. They are now virtually worthless. Additionally in the award, the panel assessed all $22,800 in forum fees of the arbitration to the Respondent, UBS. (FINRA #08-04357; Steven and Ellen Edelson v. UBS Financial Services, Inc.)

Now for the rest of the story………..On December 2, 2010, FINRA issued an Amended Award properly reflecting that this case had proceeded under the FINRA Public Arbitrator Pilot Program, which allowed parties to choose whether or not a non-public arbitrator would serve on the panel. The parties chose not to and the case proceeded with an all public arbitrator panel. Perhaps this had a bearing on the Claimants receiving a 100% recovery of their losses and having 100% of the forum fees assessed against UBS.

Contact our securities law firm at 1-800-259-9010 for a confidential, no obligation consultation if you have suffered losses involving Lehman Brothers Principal Protected Notes.

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