Corporate & Securities Law

UBS AG Yield Optimization Notes: What You Need to Know

By Keith Griffin

Maddox, Hargett & Caruso currently is investigating complaints tied to UBS structured investments and the way in which the products were marketed and sold to investors.

Specifically, numerous complaints allege that these products, which include the UBS AG Yield Optimization Notes with Contingent Protection linked to the common stock of Lehman Brothers Holdings, were sold by certain brokers with the characterization that investors? principal investment would be fully protected.

In reality, these notes subjected investors to significantly more risk than they expected based on the risk characterization portrayed by their broker. Many of the investors who eventually purchased UBS AG Yield Optimization Notes were conservative, risk-averse investors looking to preserve their capital and generate income.

UBS AG Yield Optimization Notes are considered a reverse convertible. This type of investment is not only difficult to understand but also highly risky. In the case of the UBS Optimization Notes, the investment?s actual performance was linked to Lehman Brothers stock. When Lehman Brothers filed bankruptcy in September 2008, the notes became worthless.

As a result, investors lost all their principal investment. The contingent protection associated with the product turned out to be of little benefit because that protection vanished overnight when Lehman?s stock price went south.

Many investors failed to realize key details about UBS AG Yield Optimization notes because certain information was never disclosed to them. Making matters worse: They also never learned about the worsening financial condition of Lehman Brothers - until it became too late.

If you have suffered losses in Lehman principal-protected notes and wish to discuss filing an individual arbitration claim with FINRA or have questions about these investments, please contact us.

Full post as published by Representing Investors on January 30, 2011 (boomark / email).