The Financial Industry Regulatory Authority said UBS and some of its financial advisers failed from March to June 2008 to emphasize that Lehman's 100% principal-protection notes were unsecured, meaning that payment was not guaranteed.
Lehman filed for Chapter 11 bankruptcy protection on September 15, 2008.
FINRA said UBS agreed to pay a $2.5 million fine and make $8.25 million of restitution to customers. It did not admit wrongdoing in agreeing to settle.
(Reporting by Jonathan Stempel; Editing by Steve Orlofsky)