{"id":3089,"date":"2014-04-15T00:00:00","date_gmt":"2014-04-15T04:00:00","guid":{"rendered":"http:\/\/silverlaw.lawblogger.net\/blog\/finra-arbitration-panel-orders-ubs-to-pay-5-3-million-for-misleading-a-financial-advisor-and-his-clients-about-a-proprietary-product-tied-to-lehman-brothers\/"},"modified":"2014-04-15T00:00:00","modified_gmt":"2014-04-15T04:00:00","slug":"finra-arbitration-panel-orders-ubs-to-pay-5-3-million-for-misleading-a-financial-advisor-and-his-clients-about-a-proprietary-product-tied-to-lehman-brothers","status":"publish","type":"post","link":"https:\/\/www.silverlaw.com\/blog\/finra-arbitration-panel-orders-ubs-to-pay-5-3-million-for-misleading-a-financial-advisor-and-his-clients-about-a-proprietary-product-tied-to-lehman-brothers\/","title":{"rendered":"FINRA Arbitration Panel Orders UBS to Pay $5.3 Million for Misleading a Financial Advisor and his Clients about a Proprietary Product Tied to Lehman Brothers"},"content":{"rendered":"<\/p>\n<p>A former UBS broker recently won a FINRA arbitration claim against UBS Financial Services for misleading him and his clients about the risks associated with structured notes tied to Lehman Brothers Holdings, which suffered significant losses in 2008.\u00a0 Silver Law Group primarily represents investors in claims against UBS and other brokerage firms.\u00a0 However, this award deserves attention because it highlights a fundamental flaw in Wall Street\u2019s business model.\u00a0 UBS created a system to use its sales force to sell millions of dollars in Lehman Brothers debt.\u00a0 However, faced with undesirable evidence of Lehman\u2019s financial problems, UBS knowingly chose to not inform its financial advisors or retail clients about the problems.\u00a0 Put differently, this was a \u201ctop down\u201d problem because the misconduct was by UBS senior management.\u00a0 We are seeing the same set of facts in claims by investors against UBS in Puerto Rico, where UBS senior management served as the biggest supporters of proprietary UBS bond funds and UBS placed no restrictions on financial advisors or on the concentration levels in a customer\u2019s portfolio.<\/p>\n<p>The FINRA arbitration panel awarded $4 Million in compensatory damages, $1 Million in punitive damages and $335,000 in attorneys\u2019 fees and costs, specifically finding UBS had \u201cdeliberately prevented the distribution of material information about Lehman Brothers sinking financial condition and continued to recommend the sale of Lehman Brothers [Notes] despite clear evidence of the company\u2019s rapid decline.\u201d\u00a0 The panel also ordered that the 39 complaints filed against this broker be erased from his record.<\/p>\n<p>The backdrop leading to this award is eerily similar to what is happening today at UBS in Puerto Rico (\u201cUBS-PR\u201d).\u00a0 UBS-PR aggressively pushed the sale of closed-end bond funds (CEFs) involving Puerto Rican debt which were proprietary to UBS.\u00a0 UBS allegedly misled the majority of its brokers and clients concerning the risks associated with CEFs.\u00a0 UBS is also alleged to have withheld negative information about the CEFs from its brokers and its clients, thereby preventing a full understanding of Puerto Rico\u2019s deteriorating economy and the effects that decline would have on the leveraged and illiquid CEFs.\u00a0 Could it be that the majority of UBS-PR brokers who now find themselves facing numerous customer complaints were simply following the instructions given by UBS and doing what they were trained to do\u2014sell UBS recommended products?<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.silverlaw.com\/blog\/finra-arbitration-panel-orders-ubs-to-pay-5-3-million-for-misleading-a-financial-advisor-and-his-clients-about-a-proprietary-product-tied-to-lehman-brothers\/\"  title=\"Continue Reading FINRA Arbitration Panel Orders UBS to Pay $5.3 Million for Misleading a Financial Advisor and his Clients about a Proprietary Product Tied to Lehman Brothers\" class=\"more-link\">Continue reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A former UBS broker recently won a FINRA arbitration claim against UBS Financial Services for misleading him and his clients about the risks associated with structured notes tied to Lehman Brothers Holdings, which suffered significant losses in 2008.\u00a0 Silver Law Group primarily represents investors in claims against UBS and other brokerage firms.\u00a0 However, this award [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[588,595,599,614,615],"tags":[131,287,550,290,551,552,553],"class_list":["post-3089","post","type-post","status-publish","format-standard","hentry","category-finra-arbitration","category-investment-fraud","category-securities-arbitration","category-structured-products","category-ubs-puerto-rico-bond-funds","tag-finra-arbitration-2","tag-investment-fraud-2","tag-lehman-brothers","tag-securities-arbitration","tag-structured-products-2","tag-ubs-bond-funds","tag-ubs-closed-end-bond-funds"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FINRA Arbitration Panel Orders UBS to Pay $5.3 Million for Misleading a Financial Advisor and his Clients about a Proprietary Product Tied to Lehman Brothers &#8212; 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