Vernon Litigation Group and the Carrigan Law Firm File $1 Million in Securities Fraud Claims Against Ubs for Lehman Principal Protected Note Conduct in Texas State Court

Houston, Texas — Attorneys for investors have filed $1 million in securities fraud charges in Texas state court against UBS in an effort to force UBS to answer for its Lehman principal protected note sales in a public court case versus private industry-sponsored arbitration.

Trial lawyer Stephen Carrigan, who has hired nationwide investor protection law firm Vernon Litigation Group as co-counsel, is pursuing two lawsuits in Texas state court where UBS may have to defend its conduct in a public venue versus the secret industry-sponsored arbitration forum run by FINRA, the Financial Industry Regulatory Authority. FINRA proceedings are often closed to the public and case documents typically aren’t public record during the proceedings.

“The closed-door FINRA proceedings have allowed UBS to hide some of its most egregious conduct from public view and public accountability,” attorney Carrigan said. “We want UBS to answer for its conduct in a public court case before a public jury.”

Arbitrators have repeatedly sided with investors and against UBS in FINRA arbitration in cases involving Lehman principal-protected notes that were pitched and sold to investors as safe and 100 percent principal protected. The suits — one filed in Nueces County, Texas, and the other filed in Harris County, Texas — call upon a jury to impose significant punitive damages against UBS.

“FINRA has only imposed very limited monetary sanctions as a result of finding gross misconduct, and as a result, the monetary sanctions are incredibly inadequate in light of the enormous profits UBS obtained by taking advantage of Lehman’s financial troubles to engage in a tremendously lucrative predatory lending strategy while simultaneously earning fees and commissions from the Lehman products it sold to its customers without disclosing the risks,” one of the lawsuits claims. “Very significant punitive damages are appropriate in light of UBS’ gross malfeasance in this case.”

Carrigan is also the Plaintiff in one of the lawsuits filed against UBS on May 14, 2011. The suit claims a broker-sold him $750,000 in Lehman principal-protected notes and repeatedly, in essence, said “there was no downside risk in these notes and that the worst possible case was the Plaintiffs would break even and receive a 100 percent guaranteed return of their investment,” the lawsuit claims.

UBS (NYSE: UBS) designed the Lehman structured product and marketed it to its customers as safe and 100 percent “principal protected” even though in reality, the principal-protected notes were essentially an unsecured loan to now-bankrupt Lehman Brothers.

These UBS-designed investment products supplied Lehman Brothers (LEHMQ.PK) with an infusion of unsecured loans from main street investors as Lehman Brothers’ solvency became a concern, according to the claim. The Lehman Brothers bankruptcy in September 2008 left Lehman noteholders standing essentially at the back of the line as unsecured creditors.

In the second lawsuit, the broker sold a Texas investor $300,000 worth of Lehman principal-protected notes. After the Lehman bankruptcy, the investor saw the value of the notes drop to zero on his monthly account statement, the lawsuit states. Initially, the broker told the investor it was just “an accounting error” but later the broker said UBS would make its clients whole, which didn’t happen.

In April, FINRA hit UBS with a $2.5 million misconduct fine for its sales practices with respect to Lehman structured products. Following the announcement, investor rights attorney Christopher Vernon blasted the action as inadequate, saying: “FINRA, Wall Street’s self-regulatory organization, has handed one of its own a paltry fine for gross misconduct and deception of investors.”

The Vernon Litigation Group law firm and its advocacy on behalf of Lehman note investors were recently featured in a March 2011 AARP Magazine article “The Time Bomb in Your Nest Egg” discussing the dangers of investing in structured products. Vernon Litigation Group, based in Naples, Florida, represents investor victims with Lehman note losses in excess of $10 million.

For more information contact:

Christopher Vernon - Vernon Litigation Group, attorneys at law

999 Vanderbilt Beach Road, Suite 200, Naples, Florida 34109

(239) 319-4434 Email to

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