DEUTSCH & LIPNER - UBS EXPERTS

 

            In 2008, as the banks and brokerage firms were in their downward spiral, the 165-year-old Lehman Brothers filed bankruptcy. UBS, the giant financial institution, had been large sellers of Lehman debt in the form of so-called “Structured Products.” Many of these products, which bore the mis-leading titles “100% Principal Protection” and “Partial Principal Protection,” had been marketed to investors as safe alternatives to investing directly in funds or indexes. In fact, these well-disguised investments were the unsecured debt of Lehman, and those who bought them were suddenly creditors in the Lehman bankruptcy.

 

            Almost immediately, Deutsch & Lipner was retained by groups of investors who had been deceived by UBS. Over the course of the next three years, Deutsch & Lipner would be retained by over 100 such investors.

 

            Deutsch & Lipner were among the first law firms in the country to win victories over UBS in cases involving these Structured Products. In a series of three cases decided in 2010, UBS was required to pay over $1 million to Deutsch & Lipner clients.

 

            Other victories followed. Each time, Deutsch & Lipner, by conducting vigorous discovery and cross-examining UBS’s witnesses, learned more about how this debacle had occurred. But because of the private nature of the arbitration forum and requirements of confidentiality, Deutsch & Lipner were unable to reveal to the public what they (and perhaps they alone) had learned about UBS and its improper sales of Lehman Brothers’ Structured Products.

 

            In 2013, Deutsch & Lipner was retained by a former UBS Financial Advisor named Edward Dulin. Mr. Dulin, while at UBS, had recommended that his clients purchase Structured Products, and some of those clients had purchased Structured Products issued by Lehman. When Lehman filed bankruptcy, Mr. Dulin knew deep down that something was rotten at UBS. He left the firm within weeks of the Lehman bankruptcy. In 2012, after his clients had received restitution from UBS, Mr. Dulin commenced his own arbitration, alleging that UBS’s deceitful practices had injured his reputation and livelihood.

 

            After conducting months of hearings, listening to dozens of witnesses and reviewing thousands of exhibits, a distinguished panel of FINRA arbitrators awarded Edward Dulin over $5.3 million for the injury UBS caused his business. In the Award, these FINRA arbitrators exposed the wrongdoing at UBS that Deutsch & Lipner uncovered and presented at the hearing. That FINRA Panel found that:

[T]he UBS Structured Products Department in Weehawken, New Jersey, deliberately prevented the distribution of material information about Lehman Brothers sinking financial condition and continued to recommend the sale of Lehman Brothers structured products despite clear evidence of the company's rapid decline Thus, Respondent consciously pursued conduct creating substantial risk of harm to Claimant and other[s]....

Specifically, the Panel finds that the UBS Structured Products Department continued to tout Lehman Brothers structured products despite (1) mounting evidence that Lehman Brothers' creditworthiness was crumbling, and (2) increasingly pointed concern among top UBS executives in the U.S., London and Zurich that the sale of Lehman Brothers products should be suspended. The head of UBS Structured Products Department in Weehawken, New Jersey told his staff not to advise the Financial Advisors about bad Lehman Brothers news because of his fear that they (the Financial Advisors) might misinterpret it....

 

            The award included $1 million in punitive damages as a result of this egregious conduct. In addition, the arbitration panel recommended the expungement of all the customer complaints related to these incidents from Mr. Dulin’s record on the ground that he was personally blameless and not involved in any sales practice violations.

 

            The Dulin award is unprecedented in its size and scope. Rarely, in the quasi-secret world of securities arbitration, where the playing field is tilted toward large financial institutions, is a result like that in Dulin v. UBS ever obtained. Rarely does an arbitration claimant receive such a just award. In commenting on the victory, Seth E. Lipner (who conducted the bulk of the hearing on behalf of Mr. Dulin), said: “This is, undoubtedly, the first case in the history of FINRA arbitration where the rug was pulled back and the seemey side of Wall Street exposed in an arbitration award....We are very pleased with the result, but even more pleased that the arbitration panel exposed to the public what we were required by the arbitration system to keep confidential.”

 

            Deutsch & Lipner fought UBS and its teams of lawyers for four years in an effort to ferret out and expose UBS as a duplicitous firm that acted only in its own self-interest, and in complete disregard for the interests of its investors and its registered representatives. Deutsch & Lipner brings that same level of tenacity and skill to each and every case it brings against the giants of Wall Street.

 

UBS - HERE WE GO AGAIN

            

             UBS...Is there a scandal they aren’t involved in? This week, Bloomberg reported that the U.S. Justice Department is looking into whether UBS Group AG misled clients in the marketing and selling of some foreign-exchange structured products. (See below). It appears UBS may have been mis-pricing the securities, taking advantage of the vagaries and unregulated space that is the international currency/forex market.

 

             Structured products are derivatives, created and issued by investment banks like UBS, that are tied to an index or basket of securities or other financial instruments.

 

            According to Bloomberg, this time the victims appear to institutions rather than ordinary investors. That only proves how opaque Structured Products are, and how even “sophisticated” investors can be fooled.

 

The Bloomberg article is at 

http://www.bloomberg.com/news/articles/2015-02-08/ubs-currency-product-sales-targeted-by-u-s-justice-department

 

DEUTSCH & LIPNER REPRESENTS INVESTORS

WHO BOUGHT PUERTO RICO BONDS

 

            Deutsch & Lipner has been investigating and pursuing cases on behalf of investors in bonds issued by Puerto Rico and its subdivisions, as well as those involving the sale of Closed End Funds and other mutual funds that owned Puerto Rico bonds. Respondents and potential respondents include UBS, Morgan Stanley and Merrill Lynch.

 

            As was the case with the Lehman Structured Products, success in prosecuting these cases will require in-depth knowledge of how these firms operate and how to prove that the deteriorating credit quality of the issuers of these securities was known to, or reasonably should have been known to, the Wall Street banks that pushed these securities on their customers.

 

            Deutsch & Lipner has a 30-year history of pursuing similar cases with tenacity and professionalism. Deutsch & Lipner was in the fore-front of exposing and prosecuting cases based on a host of Wall Street scandals, from the Prudential-Bache Limited Partnerships of the 1980s and 1990s, to the WoldCom fiasco and “tech-wreck” of in 2002 and 2003, to the sub-prime debacle of more recent years.

 

            And as was the case with the Lehman Structured Products, exposing the wrongdoing of firms like UBS, Merrill and Morgan requires the experience of a firm like Deutsch & Lipner. And the respect that Deutsch & Lipner has among its adversaries, in our experience, produces optimal settlements and results for our clients.

 

MASTER LIMITED PARTNERSHIPS & OTHER ENERGY-RELATED LOSSES

 

            The recent steep decline in crude-oil prices has already had a devastating effect on oil exploration, oil drilling and natural-gas based investments. In this era of low interest rates and a soaring stock market, some investment advisors have been recommending and loading investors up risky oil and gas deals. But are these good deals for you -- or are they just good deals for your advisor?

 

            How much does your advisor really know about these "deals"? How much due diligence was performed? How much was explained to you? Looking back, do you think the investment might have been unsuitable -- with more risk than you were told, or than you can tolerate?

 

             Limited Partnerships and Master Limited Partnerships, are often packaged as "private placements" and offer brokers high commissions. That situation is rife for conflict of interests. These investments tend to be complex, leveraged arrangements in which sponsors, managers and investment bankers receive guaranteed rewards, and you get all the risk.

 

            Deutsch & Lipner has experience prosecuting cases involving oil and gas investments going back to the Prudential-Bache Limited Partnership scandal of the 1990s.

 

If you think you have been injured, call us now. Unreasonable delays in taking action can hurt your case

 

 

STRUCTURED PRODUCTS--"AIRBAG AUTOCALLABLE YIELD OPTIMIZATION NOTES" ON GTAT   

 

             In summer 2014, UBS offered its clients a so-called "Airbag Autocallable Yield Optimization Note" tied to the stock price of GT Advanced Technologies (GTAT).  This "reverse convertible" security is a complex mix of corporate debt (Deutsche Bank was the issuer) and consists of opaque knock-out option contracts on GTAT stock.

 

            At the time the security was issued, UBS research rated GTAT a "buy." But as the stock price slipped in early September, the UBS analyst changed his rating to "Neutral/Under Review."  The GTAT stock price, which had been driven up on speculation that Apple was going to award GTAT a big contract to produce sapphire screens for the I-Phone 6, was declining in the face of news that Apple was not going to use the GTAT sapphire screens in its new phone.

 

            Less than a month later, in October, GTAT filed bankruptcy.

 

            Anyone who invested in these "airbag" securities quickly learned that when the stock crashes, the investor is left holding the "bag" -- in this case, a worthless security.

 

            If you owned this security and your advisor failed to tell you about the downgrade and the looming problems at GTAT, you may have a claim. This was a highly speculative security from the start, and it only got worse as time went on. If so, please contact us immediately to learn about your legal rights.

 

 

CHURNING AND EXCESSIVE FEE CASES

 

            In 2013 and 2014, Deutsch & Lipner were retained in a host of cases involving excessive fees charged by brokers to their investor-customers. These cases run the gamut - from commission-based accounts that were excessively traded, to investors improperly put in fee-based accounts, to investors who were the victims of undisclosed (and excessive) mark-ups, to investors who were improperly sold initial offerings (with large underwriting discounts) in discretionary accounts.

 

            Unfortunately, the environment is ripe for such rip-offs. Business at brokerage firms are down, and low-cost competition can drive unscrupulous brokers to find ways to maximize their commissions and earnings. Deutsch & Lipner’s 30-year experience representing aggrieved investors enables us to identify inappropriate transactions, hidden charges and costs, and greedy brokers.

 

            Deutsch & Lipner has a long history of obtaining disgorgement of fees on behalf of over-charged investors, even in cases where the investor experienced no investment losses.

 

 

CASES INVOLVING INVESTMENT ADVISORS

 

            A trend in the financial field is away from traditional broker-dealers and toward so-called “Investment Advisors.” Investment Advisors are different from brokers because they assume “discretion” over their customers’ accounts.

 

            Sadly, Investment Advisors are poorly regulated by the government. There are no licensing or capital requirements and no requirements that such individuals or firms have insurance. They are not subject to the rules that bind broker-dealers, and there is little if any oversight of their activities. And unless Investment Advisors are also brokers (few are), they are not required to arbitrate at FINRA. That fact presents its own complications and forum-related issues.

 

            Investors who were injured by Investment Advisors need a law firm experienced in this new and growing area in order to navigate successfully the different issues and rules presented in Investment Advisor cases. Deutsch & Lipner has the knowledge and experience to do that and obtain optimal results for their clients.

 

 

EXPUNGEMENT OF CUSTOMER COMPLAINTS

 

            In 2013, Seth E. Lipner published his ground-breaking research article, "The Expungement of Customer Complaint CRD Information Following the Settlement of a FINRA Arbitration," 19 Fordham Journal of Corporate and Financial Law 57 (2013). 

 

            Professor Lipner's work was the subject of Business Section front-page article in the NYTimes. See Antilla, “A Rise in Requests From Brokers to Wipe the Slate Clean,” New York Times, June 10, 2013, at p.C1. That work had a almost immediate impact on FINRA's expungement process and the public interest. Prof. Lipner's article exposed FINRA's post-settlement expungement process as a broken system.

 

            Prof. Lipner's article is a detailed study of the FINRA expungement process. At its heart is a statistical study of hundreds of FINRA expungement awards. The statistical study is combined with an in-depth examination of FINRA's SEC filings and rules and, a legal analysis of all the relevant court cases and legal and ethical issues surrounding the issue. The article exposes serious flaws in FINRA's expungement procedures. Prof. Lipner's research convincingly demonstrates that FINRA's process is in dire need of reform., and that reform is now underway.  It started because of his scholarship.

 

            Even before his law review article was published, Prof. Lipner's research was already attracting attention. For example, on October 14, 2013, FINRA sent a formal Notice to all of its 6000-plus arbitrators, FINRA called the Notice "mandatory reading." A proposal by FINRA to amend its expungement procedures followed in January 2014. The problems with expungement exposed by Prof. Lipner have also attracted the attention of several senators, including Senator Edward Markey of Massachusetts.  One of the Senator's aides recently wrote to Prof. Lipner, thanking him for sending the article and stating that it "provided us with an excellent history of the arbitration process and good suggestions for reform."

 

            Deutsch & Lipner represents Registered Representatives seeking expungement of unjust customer complaints. Our in-depth knowledge of the origin of the expungement rules, how they work, and the law in this area makes them especially well-qualified to pursue this extraordinary remedy on behalf of those who seek expungement relief. 

 

 

CASES AGAINST ACCOUNTANTS AND THOSE WHO FACILITATE FRAUD

 

          Deutsch & Lipner is wrapping up its successful prosecutions of cases involving arch-thief Bernard Madoff. In addition to representing clients in dealings with SIPC and the bankruptcy court, Deutsch & Lipner was co-counsel in The Jordan Group LLC v. Beacon, et al. Deutsch & Lipner, together with other leading law firms, achieved settlements in excess of $230 million from entities, including advisors and accountants of so-called "feeder funds," who facilitated Madoff's fraud. Because of the efforts of Deutsch & Lipner, at least some investors in Madoff will be made whole despite that massive Ponzi scheme.

 

          Deutsch & Lipner has won large sums in similar cases of fraud facilitation. For example, in 1995, Deutsch & Lipner won $1.2 million in Lash v. Prudential Securities, Inc. Hildegard Lash was a holocaust survivor who, while incapacitated, was victimized by a trusted advisor. The advisor  stole all her money and squandered it at, among other things, casinos in Atlantic City. A deadbeat by the time his fraud was discovered, Deutsch & Lipner assisted in recovering money from Prudential, a brokerage firm that facilitated the thefts. Unfortunately, Mrs. Lash did not survive to see her assets restored, but that money is now preserved in The Hildegard Lash Foundation, which supports the education of parentless youth.

 

          Deutsch & Lipner has a long history of identifying "deep pockets" who have vicarious liability for the wrongs of others (including perpetrators of elder abuse), and thereby obtaining compensation for victims. Brokers, accountants and lawyers who help others perpetrate fraud (often by turning a blind eye to theft or abuse) can, in appropriate cases, be made to pay for their indifference or professional malfeasance.

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