Skip to main content

Regulators Continue to Examine Lehman Bros. Principal Protected Note Sales

Financial Regulators in 10 states including Florida, Texas, New Hampshire and Missouri, are examining whether brokers improperly sold structured notes; securities that package debt with derivatives which are typically offered to individual investors.

This financial product was marketed to customers as a solid and secure investment.  They are called a ‘100 percent principal protected absolute return barrier notes,’ complex debt instruments whose pay-offs are linked to the performance of reference stocks, indices, commodity prices, interest rates, or exchange rates.

The regulators are investigating whether investors received adequate disclosure of the risks associated with this product from their financial advisers. Investors in these securities have suffered billions of dollars in losses since the financial meltdown in 2008.

Brokerage firms often issued these securities; many investors Lehman Brothers Principal Protected Notes marketed by Lehman Brothers, Citigroup, Merrill Lynch, UBS and Wachovia. Those notes are now virtually worthless.