In this issue: FINRA’s “Principal Protected” Consent Agreement with UBS: Lessons and Reminders for the Structured Products Industry; and FINRA Delays Effective Date for New Suitability and Know-Your-Customer Rules.
On April 11, 2011, the Financial Industry Regulatory Authority (“FINRA”) announced that it had fined UBS Financial Services, Inc. (“UBS”) $2.5 million, and required UBS to pay $8.25 million in restitution to investors. These penalties arise from alleged misleading statements and omissions in connection with offerings of so-called “principal protected notes” (PPNs). These notes were issued by Lehman Brothers and underwritten by UBS prior to Lehman’s September 2008 bankruptcy filing.
These actions represent an additional step in the widely covered proceedings relating to these sales. These offerings, and Lehman’s subsequent bankruptcy, have also resulted in class-action litigation against UBS and substantial (and mostly negative) coverage in the mainstream media.
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