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InvestorLawyers.net’s founder Christopher J. Gray is presently handling cases against UBS on behalf of investors who sustained losses various purportedly “Principal Protected” debt securities sold by brokerage firm UBS to its customers. These notes, which have various names, are also referred to as guaranteed linked notes, these securities were “structured products” that combined fixed income investments with derivatives. What resulted was a product that supposedly provided the protection of fixed income, with the upside of the stock market.

The claimants have reported won at least seven cases against UBS involving these notes, with only a single loss. Further, the single loss was reportedly in the case of an investor who was not represented by an attorney and only submitted paperwork describing his claim but did not actually appear at an arbitration hearing.

Lehman Principal Protected Notes were marketed by several brokerage firms, including Lehman Brothers, Citigroup, UBS, Merrill Lynch and Wachovia, as conservative investments. Investors looking for income with capital preservation were advised that Lehman Principal Protected Notes would provide preservation of capital, a modest yield, and a slight gain in principal. In a brochure issued by Lehman Brothers, it stated that their “structured notes”, which includes Lehman Principal Protected Notes, had “100 percent principal protection” and “uncapped appreciation potential” based upon the gains in the S&P 500 Index. In reality, however, investors of Lehman Principal Protected Notes were subject to a significant amount of risk.

The Commodities Futures Trading Commission filed a case on May 24, 2011 alleging that certain commodities traders including Parnon Energy, Inc., Arcadia Petroleum Ltd. and Arcadia Energy (Suisse) SA ("Defendants") violated the Commodities Exchange Act. The complaint alleges that defendants caused the price of futures and options contracts on West Texas Intermediate light sweet crude oil ("WTI") traded on the New York Mercantile Exchange ("NYMEX") to be artificial by carrying out a cross-market trading scheme between January and April of 2008 involving the accumulation and sell-off of a substantial position in physical crude oil to manipulate futures prices.

During the relevant period Defendants allegedly traded futures and other contracts that were priced off of the price of WTI. WTI is delivered to commercial users at Cushing, Okla., a major crude oil delivery point. The price of WTI is a benchmark for crude oil prices around the world, and the supply of WTI at Cushing is an important driver of WTI price.

According to the allegations in the CFTC case, Defendants conducted a manipulative cycle, driving the price of WTI to artificial highs and then back down, to make unlawful profits. First, they allegedly purchased large quantities of physical WTI crude oil during the relevant period, even though they did not have a commercial need for crude oil. They allegedly purchased the oil pursuant to their scheme to dominate and control the already-tight supply at Cushing to manipulate the price of WTI upward and to profit from the corresponding increase in value of their WTI futures and options contracts on NYMEX and IntercontinentalExchange ("ICE").

Law Office of Christopher J. Gray, P.C. informs investors that if they wish to opt out of the securities settlement of a class action lawsuit (In re Tremont Securities Law, State Law, and Insurance Litig., U.S. District Court for the Southern District of New York Master Docket No. 08-CV-11117 (TPG), hereinafter referred to as the “class action”) involving certain Rye and Tremont funds they must do so by May 11, 2011.  If final approval of the proposed settlement is granted by the U.S. District Court for the Southern District of New York, investors who do not exercise their right to opt out will become members of the certified class and will receive a pro rata distribution of the $100 million settlement fund created in connection with the settlement.  A summary of the terms of the settlement is accessible below.

summary notice scanned.pdf (233.20 kb)

Former head energy trader at now-defunct hedge fund Amaranth Brian Hunter was assessed a civil penalty of $30 million for allegedly violating the Federal Energy Regulatory Commission's ("FERC") anti-manipulation rules.  FERC had charged Hunter with causing artificial prices in physical natural gas as an outgrowth of his alleged scheme to artificially depress the price of NYMEX natural gas futures on three dates in 2006.  The alleged scheme involved depressing the settlement prices of NYMEX futures, which allegedly enabled Amaranth to profit via a short position in natural gas swaps traded on the InterContinental Exchange ("ICE"). 

The Gray firm and co-counsel represent a class of persons who transacted in NYMEX natural gas futures between February and September 2006 who were harmed by the same alleged scheme. (In re Amaranth Natural Gas Commodities Litig., S.D.N.Y. Docket No. 07-CV-6377 (SAS).  The Court certified the class on September 30, 2010 after granting an order attaching some $72 million in Amaranth's assets in May of 2010.  The class certification order and attachment order are accessible via other entries on this blog.  The FERC news release announcing the fine against Hunter is accessible below. 

11.4.21 ferc release re hunter fine.pdf (68.82 kb)

The Financial Industry Regulatory Authority ( or "FINRA") reached a settlement with and fined brokerage firm UBS Financial Services concerning UBS’s sale of so-called "100% Principal-Protection" notes issued by the former Lehman Brothers Holdings.

The settlement resulted in UBS agreeing to pay a fine of $2.5 million, and required UBS to pay $8.25 million in restitution for omissions and statements made that effectively misled some investors regarding the "principal protection" feature of 100% Principal-Protection Notes (PPNs) Lehman Brothers Holdings Inc. issued prior to its September 2008 bankruptcy filing. The FINRA settlement also creates a restitution fund of approximately $8 million that is available to limited class of purchasers of the PPNs from UBS (as further explained below).

FINRA determined that from March to June 2008 as the credit crisis worsened, UBS advertised and some UBS financial advisors described the structured notes as principal-protected investments and failed to emphasize they were unsecured obligations of Lehman Brothers, which eventually filed for bankruptcy in September 2008. FINRA also found that some of UBS' financial advisors did not understand the product, including the limitations of the "protection" feature. Consequently, certain financial advisors communicated incorrect information to their customers. FINRA also found that ccertain UBS advertising materials had the effect of misleading customers regarding the characteristics and risks of the PPNs.

Christopher J. Gray, P.C., along with co-counsel, has filed a putative class action alleging the hedge fund Moore Capital violated the antitrust laws by manipulating the prices of palladium and platinum via a scheme of orchestrated trading during the last few minutes before the expiration of certain futures contracts traded on the New York Mercantile Exchange ("NYMEX") (for which the underlying commodity was platinum or palladium).

 The action, in which an amended complaint is due to be filed on or before August 9, 2010 pursuant to court order, will seek to represent a class of all persons who transacted in physical platinum or palladium conforming to the NYMEX delivery requirements between November 1, 2007 and May 31, 2008. NYMEX rules specify that to conform to delivery requirements platinum and palladium must be 99.95 percent pure and consist of ingots or plates weighing at least ten ounces, each of which is incised with the lot or bar number, weight, grade, name or logo of the assayer, and symbol identifying the metal.

The case is styled F.W. DeVito Inc. Retirement Trust v. Moore Capital Management, U.S. District Court for the Southern District of New York Docket No. 10-CV-4630 (WHP).  The complaint is accessible below.  

Christopher J. Gray. P.C. and its co-counsel filed a Second Amended Complaint on March 31, 2010 containing substantial new allegations concerning Bank of America's alleged knowledge of and substantial assistance provided to the now-defunct Ponzi scheme operation known as Agape World. 

 The Second Amended Complaint alleges, among other things, that Bank of America ignored the fact that a total of over $2 billion passed through Agape's accounts despite Agape's having no legitimate business reason for such transfers of money (which are a classic red flag of racketeering and money laundering).  The Second Amended Complaint also alleges that Bank of America helped Agape solicit investors from Bank of America's own customers.

 In preparing the Second Amended Complaint, counsel for plaintiffs engaged in a substantial investigation  that included a comprehensive review of Agape and Bank of America documents produced in accordance with the Court-ordered subpoena to the Agape Bankruptcy Trustee; an analysis of Agape investor documents; scores of interviews with former Agape employees and Agape investors; consultations with a former Federal Reserve official and banking compliance expert; independent research concerning Bank of America procedures; and the review of news accounts, court papers and other publicly available documents. 

Christopher J. Gray, P.C. and its co-counsel for plaintiffs have filed a motion for class certification in the Amaranth commodities manipulation class action case pending in the U.S. District Court for the Southern District of New York.  The motion seeks certification of all persons, corporations, and other legal entitied (other than defendants) who purchased or sold the New York Mercantile Exchange ("NYMEX") natural gas futures contracts (including miNY Henry Hub natural gas futures contracts) between February 16, 2006 and September 28, 2006 ("Class Period").

A copy of the moving memorandum of law (as redacted for public filing with the Court) is accessible below.

09.10.15 class cert memo of law.pdf (319.24 kb)

The U.S. District Court for the Southern District of New York (Judge Shira A. Scheindlin) has denied several defendants' renewed motions to dismiss the commodities manipulation class action complaint against a hedge fund known as Amaranth.  The Court has now denied motions to dismiss filed by two of Amaranth's domestic feeder funds, its master fund Amaranth LLC, its trading advisor, and the traders who allegedly carried out a market manipulation scheme and caused artificial prices in the market for natural gas futures during much of 2006.

 Christopher J. Gray, P.C. represents the plaintiffs in the case, along with five other law firms.  

The Court's decision can be accessed below.