N.H. faults UBS sale of Lehman notes
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NEW YORK - UBS AG, Switzerland's largest bank, recommended unsuitable investments to clients who bought securities underwritten by Lehman Brothers Holdings Inc., New Hampshire securities regulators said yesterday.
UBS Financial Services Ltd., the Zurich-based bank's brokerage and investment-banking unit, promised "principal protection" to many investors who stand to lose most of their money now that Lehman filed for bankruptcy, the state's Bureau of Securities Regulation said in an e-mailed statement. New Hampshire filed a cease-and-desist order against the bank.
"The safety of these products was exaggerated," Jeff Spill, deputy director of securities regulation for enforcement, said in the statement. "UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions."
UBS said it sold the securities properly and followed all regulatory requirements and disclosure guidelines.
"Any client losses were the direct result of the unexpected and unprecedented failure of Lehman Brothers, which affected all Lehman bondholders," the bank said in an e-mailed statement. "UBS will defend itself vigorously in this matter."
Lehman filed the biggest bankruptcy in US history in September, with $613 billion in debt.
