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UBS to Pay $2.5M in Fines, Restitution


FINRA has fined UBS Financial Services $2.5 million and ordered it to pay $8.25 million in restitution for conduct related to the sale of Lehman Brothers Holdings principal protection notes.

The fine and restitution are tied to the alleged misleading of investors that took place in the sale of the principal protection notes, or PPNs, before Lehman Brothers’ September 2008 bankruptcy filing. The PPNs promised a minimum return equal to an investor’s original investment, FINRA said, and were structured as fixed-income security structured products including bonds and options.

“This matter underscores a firm’s need to be clear and comprehensive in disclosing risks of the structured products it sells to retail investors,” said Finra EVP and Chief of Enforcement Brad Bennett.

“UBS is pleased to have resolved this Finra matter, under which UBS is required to reimburse a limited number of investors who purchased certain Lehman principal protection notes during a discrete three-and-a-half-month period of time,” said UBS spokeswoman Karina Byrne.

“The significant majority of UBS’s Lehman structured product sales were conducted properly, and any client losses were the direct result of the unprecedented and unexpected failure of Lehman Brothers in 2008, which affected all Lehman investors,” Byrne said.

Lori Konish writes for Financial Planning.