UBS Financial Services has been fined $2.5 million for misleading investors in its sales of Lehman Brothers structured products in 2008, according to the Financial Industry Regulatory Authority (Finra).

Finra also ordered UBS to pay $8.25 million in restitution to investors who bought the securities, which were called 100% Principal-Protection Notes.

Between March and June 2008, according to Finra, UBS advisors sold the investments-products with a bond and option component-as principal-protected investments that guaranteed a minimum return equal to the investor's initial investment. But UBS failed to warn customers the products  were unsecured obligations of Lehman Brothers Holdings Inc., according to Finra. Lehman ended up filing for bankruptcy in September 2008, making the securities virtually worthless.

During its investigation, Finra found that UBS failed to adequately emphasize the credit risk that Lehman-issued securities posed to some investors. Finra also found that UBS failed to provide sufficient training or written supervisory policies for the sale of the Lehman-issued PPNs, did not adequately analyze the suitability of sales of them to certain customers and created advertising materials that misled some customers about the characteristics of the PPNs. The advertising materials suggested that a return of principal was guaranteed if customers held the product to maturity. However, the materials did not point out that credit risk could result in loss of principal, Finra said.

"This matter underscores a firm's need to be clear and comprehensive in disclosing risks of the structured products it sells to retail investors," said Brad Bennett, Finra's executive vice president and chief of enforcement. "In cases, UBS's financial advisors did not even understand the complex products they were selling, and as a result, they neglected to disclose necessary information to customers about the issuer's credit risk so investors would understand the magnitude of the potential losses."

UBS has paid about $14.5 million in settlements or arbitration awards to investors who bought Lehman notes from March to June 2008, according to Finra disclosures cited by Bloomberg News. Last year, the Securities and Exchange Commission contacted several financial firms to discuss their use of the term principal-protected and whether it is misleading, according to anonymous sources cited by Bloomberg.

Finra said that UBS consented to the entry of Finra's findings, while neither admitting or denying the charges.