FINRA Orders UBS to Pay $5.4M to Ex-Broker Who Sold Lehman Notes
Edward Dulin, a broker currently working at Bank of America Corp's Merrill Lynch unit, alleged his ex-employer UBS AG misled its advisors about the financial health of Lehman Brothers Holdings Inc.
Between 2000 and 2008, Dulin sold Lehman Principal Protected Notes (PPNs) to his clients before Lehman filed for bankruptcy on September 15, 2008. Dulin described the notes to his clients based upon information that UBS included in broker training materials and prospectuses. That included telling clients that their principal was protected.
PPNs are fixed-income securities that include a bond and an option component that offers a minimum return equal to the initial investment. They are tailored for risk-averse investors. The PPNs Dulin sold dropped in value when Lehman filed for Bankruptcy.
The awardincluded $1 million in punitive damages, because the firm withheld material information about Lehman's "sinking financial condition" and continued to recommend the sale of the notes.
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