Lehman Brothers Structured Notes

In 2007 and 2008, major Wall Street brokerage firms and stockbrokers aggressively and fraudulently marketed Lehman Brothers structured notes to unsuspecting consumers just before the collapse of the US financial markets, and just before Lehman Brothers went bankrupt.

Because Lehman Brothers structured notes “appeared” safe and conservative, retirees and conservative investors agreed to invest in them. However, these securities were not safe and secure at all. In fact, they were in danger of becoming worthless and the brokerage firms selling them to senior citizens and conservative investors knew that.

When Lehman Brothers went bankrupt, investors lost big. As of April 2012, investors were scheduled to receive only about 20 percent of their initial investment from the Lehman Brothers bankruptcy proceeding.

If your stockbroker recommended that you invest in Lehman Brothers structured notes and you lost money as a result, you may be able to file an FINRA (Financial Industry Regulatory Authority) arbitration claim to get the rest of your money back.

How Lehman Brothers Structured Notes Happened

In 2007 and 2008, Lehman Brothers “100 percent principal protected” notes appeared to be a safe and conservative investment. The marketing literature for the structured notes even guaranteed to pay investors back all of their initial investment (at the very least), along with an unlimited potential for profit and earnings.

Of course, the “100 percent payback” guarantee depended on whether or not Lehman Brothers stayed in business. But Lehman Brothers had been in business since 1850, so it certainly didn’t seem like the bank would be going bankrupt anytime soon.

Stockbrokers and brokerage firms utilized these positive points to sell Lehman Brothers structured notes to ultra conservative and ‘risk averse’ investors.

Even worse, these big banks and brokerage firms were not innocently pushing Lehman Brothers structured notes onto investors. These banks knew that Lehman Brothers notes were not a “good and safe” investment, but they sold them to conservative investors anyway.

Here are some of the different Lehman Structured notes you may have purchased:

  • Partial Principal Protection Lehman Brothers Notes
  • Absolute Return Barrier Lehman Brothers Notes
  • Step Up Callable Lehman Brothers Notes
  • 100 Percent Principal Protection Lehman Brothers Notes
  • Some other form of this malicious security.

Bringing Lehman Brothers Structured Notes into Perspective

The biggest banks and brokerage houses on Wall Street were selling Lehman structured notes in the last ditch effort to save themselves from bankruptcy. They knowingly put innocent retirees and conservative investors at risk when it was entirely unsuitable to do so.

 Here’s why:

  • Lehman Brothers (and many other banks) were falling apart because they made too many “bad mortgage loans” to unfit home buyers.
  • The banks were not getting paid on these subprime loans and they were headed for bankruptcy as a result.
  • In order to create additional “false revenue” to stay in business, Lehman Brothers began selling Lehman Brothers structured notes, using its reputable name to make the notes appear safe and secure, even though they’d likely be going out of business soon.
  • Other banks and brokerage firms did the same, pushing structured notes backed by soon-to-collapse Lehman Brothers onto their innocent customers.

It’s clear that Wall Street banks were trying to save their own shirts by aggressively selling Lehman Brothers 100 percent principal protected notes to investors. Furthermore, since the financial services sector was in complete turmoil at the time, it’s obvious that these were unsuitably risky investments for conservative investors.

Why would anyone invest a conservative investor into a company they knew was going to fail?

Thousands of retirees, senior citizens, and conservative investors fell victim to this scam. Even worse, when Lehman Brothers declared bankruptcy in September 2008, investors lost 100% of the money they invested in Lehman Notes. Bankruptcy proceedings have since helped the victims to get back about 20 percent of their losses, but that’s hardly any consolation.

Know Your Rights

According to the Lehman Brothers bankruptcy proceedings, structured note holders are only scheduled to receive 20% of their losses back. Your brokerage firm, on the other hand, may be liable to pay you back the rest of your losses.

The following are some of the most important stock fraud legal issues that come into play when you make a claim for Lehman Brothers structured notes fraud:

Try and Get Your Money Back

If you suffered investment declines due to the fraudulent actions of your stockbroker, you deserve financial compensation. Victims may qualify for a full or partial refund of the original amount invested (minus any amount recovered through bankruptcy proceedings), in addition to other compensation.

While financial damages can be economically crippling, the realization you were lied to and played for a ‘sucker’ can be emotionally devastating. If you have fallen victim to this kind of fraud, it’s important to remember this is not your fault!

Pursuing a stock fraud claim will teach Wall Street brokerage firms that it is unacceptable to prey upon innocent consumers. Your claim may even prevent others from suffering as you have by forcing Wall Street brokerage firms to conduct business with honesty and integrity.

Contact Us

You may be eligible to receive compensation regardless of whether you sold or continue to hold the securities at issue. Contact us today to set up a free consultation. We will listen to your story, answer any questions you may have and discuss your legal rights and options.