An arbitration panel awarded $200,000 to an investor who claimed her UBS AG broker sold her risky Lehman Brothers principal-protected notes.
Her lawyer said they should not have been sold to “unsophisticated” investors.
The case was heard by a panel with the Financial industry Regulation Authority. The ruling does not set precedent and the panel does not have to provide their reasoning.
The Wall Street Journal: The broker bought two notes for his client: a $225,000 guaranteed principal protection note and a $75,000 return optimization note. The panel ruled the client should be compensated $150,000 plus interest and attorney fees on the principal protected note; there was no compensation for the $75,000 note.
The plaintiff’s attorney was Jacob Zamansky, who is a familiar face in the representation of plaintiffs in these types of securities actions. He said he is representing a dozen clients in similar situations.
UBS said it was “disappointed” in the award, “even if it was only half the compensatory losses she was seeking. UBS maintains that any client losses were the direct result of the unexpected and unprecedented failure of Lehman Brothers, which affected all Lehman bondholders.”
Binding arbitration awards are very difficult to appeal, so it is likely the award will stand as is.
The WSJ has full coverage here.
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