Securities Litigation and Consulting Group, Inc. Releases 'Structured Products in the Aftermath of Lehman Brothers'

November 4, 2009 5:10 PM EST

WASHINGTON, Nov. 4 /PRNewswire/ -- Updating research first released in 2006, Securities Litigation and Consulting Group, Inc. ("SLCG") today issued a study of Lehman Brothers' structured products program entitled "Structured Products in the Aftermath of Lehman Brothers."

SLCG's prior research showed that structured products were poor investments because they were significantly overpriced when offered and were, at best, thinly traded thereafter. SLCG concluded that overpriced structured products survived in the marketplace because structured products' opaqueness obscured their true risks and costs and the high fees earned by underwriters and salespersons.

The current SLCG study presents a brief history of the structured products program at Lehman Brothers and illustrates many of its points with Lehman structured products examples including Principal Protected Notes, Enhanced Return Notes, Absolute Barrier Notes, Steepeners and Reverse Convertibles. The study reports that the spectacular failure of Lehman brothers in September 2008 left investors holding more than $8 billion face value $US-denominated structured products. Dr. Craig McCann, the study's principal author, explained that the Lehman experience is especially instructive of the opportunity for mischief presented by financial engineering; faced with increasing borrowing costs Lehman stepped up its issuance of structured products where its credit risk would not be priced into the debt.

This study and other working papers are available at http://www.slcg.com/research.php.

Securities Litigation and Consulting Group, Inc. ("SLCG") is a financial economics consulting firm based in the Virginia suburbs outside of Washington, DC. SLCG provides consulting services and expert witnesses to law firms, publicly-traded corporations, banks, brokerage firms and individuals involved in complex litigation throughout the United States. SLCG's staff includes PhD, MA and BA level professionals with academic, industry and government experience. Its experts have testified in state and federal court and in various arbitration forums.

For further information about SLCG or its research, please contact Dr. Craig McCann at 703-246-9381, craigmccann@slcg.com or visit us at http://www.slcg.com.

SOURCE Securities Litigation and Consulting Group, Inc.

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