UBS Is Ordered To Pay Investor $2 Million In Damages

The former owner of the Philadelphia 76ers, Pat Croce and his wife Diane, are the recipients of a $2 million FINRA arbitration award against UBS Financial Services, Incorporated for investments in Lehman Brothers 100% Principal Protected Notes (100% PPN). The claim against UBS was filed with the Financial Industry Regulatory Authority (FINRA) in January 2010 seeking $2,000,000 in compensatory damages for losses sustained in the Lehman 100% PPN. The Claimants asserted various causes of action, including securities fraud, common law fraud, misrepresentation, material omission, unsuitability, breach of fiduciary duty and failure to supervise, among others. The site of the evidentiary hearing was Philadelphia, Pennsylvania.

Following the conclusion of the eight day evidentiary hearing, the FINRA arbitration panel considered all of the oral and documentary evidence and found UBS liable to the Croces for $2,000,000 in compensatory damages, less the residuary value of the investment which was $480,000. So, UBS was ordered to pay $1,520,000 plus interest at a rate of 6% per annum from September 15, 2008 to May 27, 2011. A rough calculation of the interest would be in the range of $275,000, making the total owed to be approximately $1,795,000. Additionally, the panel split the $23,250 in forum fees for the arbitration equally between the parties, assessing each side $11,625. It should be noted that the case proceeded under the Public Arbitrator Pilot Program and was heard by three public arbitrators, with one dissenting. (FINRA# 10-00361; Pasquale W. Croce, Jr. and Diane Croce v. UBS Financial Services, Inc.)

FINRA arbitration panels have routinely ruled in favor of investors since 2008 in cases involving the Lehman Brothers 100% Principal Protected Notes sold by UBS. In another huge case decided in December 2010, UBS was ordered to pay $2.2 million in compensatory damages to Thomas Motamed, the chairman and chief executive of insurance giant CNA Financial Corporation. Then in April 2011 FINRA fined UBS $2.5 million and ordered them to pay another $8.25 million in restitution for its conduct surrounding the marketing and sales of the Lehman notes.

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