Distributor can recover the compensation from the issurer of the credit linked notes

Some investors asked me if they can expect the distributor to compensate for 50% of the loss, when they only earn 3% to 5% as commission to distribute the product. Perhaps 30% is adequate.

I suggest that the distributor should compensate 50% and get the subrogation rights to recover their loss from the issuer of the credit notes. Apart from Lehman Brothers, the other issurers are still in business and are able to compensate the distributors. The distributors can also seek to recover their loss from the receiver of Lehman Brothers.

By acting in this manner, the distributors will be able to win back the trust of their customers, and also reduce their actual loss.