Neuberger Berman loses $4M Finra arbitration case

Jul 18, 2011 @ 2:27 pm

Neuberger Berman Group LLC, the money manager that was part of Lehman Brothers Holdings Inc., was ordered by an industry regulator to pay about $4 million to three clients who bought structured notes backed by the failed investment bank.

A Financial Industry Regulatory Authority panel ruled July 15 that Neuberger Berman is responsible for the investors' initial investment plus 3 percent annual interest, according to an arbitration ruling from the group. The so-called ‘principal- protected' notes were sold from June until August 2008, a month before Lehman filed for bankruptcy protection.

“Our clients had all expressed an aversion to anything Lehman,” said Alan Block, one of the claimant's lawyers, in a telephone interview. “The way the notes were sold it wasn't clear that Lehman was the underwriter.”

Rich Chimberg, a spokesman for New York-based Neuberger Berman, declined to comment. Lehman sold a majority stake in the company to employees in May 2009.

Banks create structured products by bundling debt with derivatives and offer them to individual investors as an alternative to traditional investments. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.



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