UBS and Lehman Brothers Principal Protected Notes

How could something called “principal protected notes” not be the perfect investment for retirees or other investors who consider themselves conservative and risk averse? Like auction rate securities and many other complex investment vehicles created by Wall Street firms, Lehman Brothers Principal Protected Notes are now worthless, resulting in devastating losses to those lured into buying them. UBS was the largest seller of these notes other than Lehman Brothers, although many other firms were involved in pushing them on the public as being no risk investments. Unfortunately, the notes were nothing more than unsecured Lehman debt making the investors unsecured creditors who await a pittance from the bankruptcy proceedings. Therefore, the only remaining avenue of recovery is from the firms that marketed and sold the notes.

New Hampshire, Missouri, the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have initiated investigations into the deceptive and unfair sales practices used by firms marketing the product. FINRA reminded firms of their obligations when marketing complex products such as the principal protected notes in FINRA Regulatory Notice 09-73.

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