Monday, November 3, 2008

Lehman Note Sales Under Fire

And they are out of the gate. Claimants' attorneys are preparing to file arbitrations against brokers and firms for sales of Lehman structured notes. The cases are being filed against Lehman brokers, as well as the firms that sold the securities. According to press reports UBS sold $1 billion in Lehman notes.

The merits of the claims are uncertain, although it appears that investors are going to claim that they were told that they were "less risky" than stocks. That is probably a true statement, and not actionable. Others are claiming that they were not told that the notes were tied to the credit risk of Lehman Brothers. While one has to wonder what difference that would have made to an investor, assuming it is a true statement, that claim is going to depend on the particular facts of each claim.

Fraud cases are sometimes difficult to prove, and reading between the lines in these press releases it is clear that the main claim is not going to be that there was something wrong with the notes themselves, the claim is going to be that the problem was in the sales pitch and marketing materials. Therefore, the claim is going to be that the broker misrepresented the risks of the investment, putting the blame squarely on the shoulders of the broker, rather than the firm.

Brokers are going to need their own attorneys, and this is particularly true for Lehman brokers, who have been left out in the cold by the firm's bankruptcy.

My firm is representing defending brokers from every major brokerage firm, and provides a free consultation to brokers to discuss possible defenses and claims. Concerned brokers can reach us at 212-509-6544 or by email at We represent brokers in all 50 states in regulatory and arbitration matters, and have been doing so for over 25 years.
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