Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. This was the largest bankruptcy ever filed in U.S. history. Brokerage firms such as UBS and banks like Bank Hapoalim sold Principal Protected Notes and Partially Protected Principal Protected Notes to its customers. These notes were supposed to provide either partial or complete protection of principal, regardless of the performance of the underlying investment; however many financial advisors misled customers on the risk of their investment.
If you or your loved one was sold Lehman Brothers Principal Protected Notes by UBS, Bank Hapoalim or another brokerage firm or bank, you may have cause for legal recourse. For more information on the legal rights which may be available to you, complete the Free Case Evaluation form on this page.
Banks Misled Investors on Security of Lehman Brothers Principal Protected Notes
Many financial advisors who sold these investments failed to advise their customers that if Lehman Brothers failed, they would become unsecured creditors of the company. In other words, the customer’s investment in Lehman Brothers was simply an unsecured loan, and they did not hold the underlying securities in any way.
Major brokerage firms, including UBS, Merrill Lynch, Barclays and Wachovia sold Lehman Principal Protected Notes in recent years and reportedly encouraged their sales forces to push these products on their own retail customers. By doing this, the investment banking units of the banks could continue to collect fees by underwriting these lucrative products.
The sales practices violations were reportedly the worst when it came to Lehman Brothers Principal Protected Notes that was misleadingly marketed as a “100% Principal Protection” note. This category of Structured Products misleadingly promised to return some or all of the investor’s principal if held to maturity.
Lehman Brothers Principal Protected Notes Lawsuits
As of late 2007, Lehman Brothers was an over-leveraged firm that was on the verge of complete demise. Financial advisors had the responsibility to fully inform customers of the risks involved with their investment; however, many advisors misled their customers to believe that it was a virtually risk-free or low risk investment.
If you believe that you or your loved one has been misled in the risks of investing in Lehman Brothers Principal Protected Notes, complete the Free Case Evaluation form on this page to begin exploring your legal options.