The Financial Industry Regulatory Authority (FINRA) recently fined UBS Financial Services, Inc. $2.5 million, and required the firm to pay $8.25 million in restitution to customers. The regulator's action stems from findings that UBS misled investors regarding the "principal protection" feature of 100% Principal-Protection Notes (PPNs) that Lehman Brothers Holdings Inc. had issued prior to its September 2008 bankruptcy filing. In settling this matter, UBS neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
The action illustrates the risk to investors when purchasing so-called "structured products" as they are complicated, not easily understood even by the advisers at the financial services firms, and often accompanied by sales materials that are misleading. Let's examine the important lessons for investors to understand.
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