Lehman Fallout Costs Neuberger $5.5M
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Tuesday, July 19, 2011

Lehman Fallout Costs Neuberger $5.5M

It's been more than two years since Neuberger Berman's [see profile] management freed the mutual fund firm, and yet it is still haunted by its fallen parent, Lehman Brothers. Yesterday two law firms revealed that a Finra arbitration panel just ordered Neuberger to pay their clients $5 million in damages, to compensate for Neuberger wealth manager Brian Hahn selling those clients structured products from Lehman Brothers just months before the investment bank went under.

Bloomberg, Dow Jones, the New York Times and Reuters all covered the news.

According to Dow Jones, Neuberger must pay $7,500 in legal fees, at least $450,000 in interest and $5 million in damages. Block & Landsman and the Iavarone Law Firm represented the plaintiffs, and the two firms claimed that money represents one hundred percent of what their clients invested in the products in question.

Company Press Release

CHICAGO, July 18, 2011 /PRNewswire/ -- The following was released today by The Iavarone Law Firm and Block & Landsman:  On July 15, 2011, A FINRA arbitration panel in Chicago, IL awarded damages of $5 million against Neuberger Berman and it's broker Brian Hahn in connection with the sale of Lehman Brothers structured products to three high net worth customers, two from California and one from Illinois.  The investors were represented by Nicholas P. Iavarone ( and Alan F. Block ( who jointly represent customers in disputes with the securities industry.

According to Mr. Iavarone and Mr. Block, in the summer of 2008, Neuberger Berman wealth manager Brian Hahn solicited the customers to invest in the comBATS and XLF Lehman Brothers Structured Notes. One of the customers had also invested $1 million in Libertyview Credit Select, a Neuberger Berman private equity hedge fund that hypothecated its assets to Lehman Brothers. "The customers were all told that the principal of the structured notes were either fully protected or partially protected. Neither Neuberger Berman or Brian Hahn adequately disclosed the fact that the investments were actually Lehman Brothers debt instruments and not investments in the underlying indices," said Mr. Iavarone. "The marketing of Lehman Brother structured notes targeted investors," Mr. Iavarone continued, "Especially high net worth individuals, in an effort to raise funds for Lehman Brothers under the guise of principal protected notes. When Lehman Brothers declared bankruptcy, the value of the structured notes became virtually worthless."

"The award represents 100% of the money the clients invested in the Lehman Brothers Structured Notes and in Libertyview Credit Select hedge fund," according to Mr. Block. Mr. Block stated that Dr. Craig McCann of SLCG Securities Litigation and Consulting Group ( testified at the hearing that the structured products were unsuitable and worth substantially less than the price at which they were sold in the offerings because of Lehman's extraordinary credit risk in 2007 and 2008.

If you have any questions concerning this notice, please contact: Nicholas P. Iavarone ( or Alan F. Block ( The Iavarone Law Firm and Block & Landsman are located at 33 N. LaSalle Street, Suite 1400, Chicago, Illinois 60602 and may be contacted, respectively, at (312) 637-9466 or (312) 251-1144.

SOURCE Iavarone Law Firm and Block & Landsman

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