Principal Protected Notes Attorneys
In the last four years, brokerage firms like UBS, Charles Schwab, Smith Barney and others, aggressively and recklessly offered and sold structured notes, including principal protected notes ("PPN's") to their retail customers. Investors from all around the country and the world bought these notes with promises that the notes were safe, but with the potential of generating large returns.
In reality, these notes are extremely complex financial products. And the risks associated with these notes often far outstripped the expected returns. In fact, the securities regulators specifically called these notes "Non-Conventional Investments" and warned brokerage firms that they should take special care when selling PPN's and other structured products to retail customers because the products were so complex and, potentially, risky.
One of the most well-publicized examples of PPN's gone very bad is Lehman Brothers' Principal Protected Notes. Brokers at UBS and other firms pitched these products as similar to buying a basket of stocks (such as the S&P 500) but with the added benefit of up to 100% principal protection if the market went down. However, Lehman Brothers declared bankruptcy in September 2008.
Retail customers who bought the Lehman Brothers' PPN's suddenly had no principal protection, did not own a basket of stocks, and were holding worthless pieces of paper. Chastising UBS, one government regulator recently said, "UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions."