This week, the securities fraud law firm of Shepherd Smith Edwards & Kantas LTD LLP announced that it is investigating claims involving “structured products” that were created by Lehman Brothers. Structured products are also called “structured notes.”
These financial instruments combine derivatives with equities and/or fixed incomes to create a product meant to provide the upside of the stock market along with fixed income security. These notes were usually marketed to conservative investors wanting a reasonable yield, the possibility of a modest gain in principal, and the preservation of capital. Other brokerage houses that marketed structured products to their own clients included Merrill Lynch, UBS, JP Morgan Chase, Citigroup, and Wachovia.
There is a brochure that discusses structured notes sold by Lehman Brothers in August 2008 (just one month before the now defunct brokerage firm filed for bankruptcy) that promised “100% principal protection” and “uncapped appreciation potential” based on Standard & Poor’s 500 Index gains. The collateral material also said that, at worst, an investor would regain the principal amount invested within three years. However, Lehman Brothers and other brokerage firms were actually using structured products to cover their operational shortfalls.
Based on findings from its ongoing investigation, Shepherd Smith Edwards & Kantas LTD LLP has found that buyers rarely were aware that any issuer other than the brokerage firm they were working with was involved. These purchases became immediately subject to the issuer’s credit and the investment could lose its value were the issuer to default. This may very well be what has transpired with the structured notes sold by Lehman Brothers.
Please contact our stockbroker fraud law firm today if your financial advisor suggested that you buy a Lehman Brothers structured note.
Shepherd Smith Edwards & Kantas LTD LLP Investigates Claims Involving Lehman Brothers’ ‘Structured Products’, Marketwatch, September 30, 2008
Related Web Resources:
Structured Products, Lehman Brothers
Banking Crisis: Lehman Brothers Files for Bankruptcy Protection, Guardian.Co.UK