US High Court Won't Consider Law Firm Liability In Refco Case
21 June 2011 - 12:42AM
Dow Jones News
The U.S. Supreme Court on Monday rejected an appeal by two
financial firms who sued the Mayer Brown law firm for allegedly
drafting false statements on behalf of the now defunct commodities
broker Refco Inc.
The court's refusal to hear the securities-fraud case comes a
week after it ruled 5-4 that plaintiffs in such cases can't sue
parties who draft false statements that are made by someone else.
Last week's ruling barred an investor lawsuit against Janus Capital
Group Inc. (JNS).
Pacific Investment Management Co., or Pimco, and another firm
were seeking to revive their securities-fraud claims against Mayer
Brown and one of its former partners, Joseph P. Collins, who served
as outside counsel for Refco, which collapsed into bankruptcy less
than two months after its initial public offering in 2005.
Refco had been a leading provider of brokerage and clearing
services for international commodities, derivatives and futures
markets.
Pimco, a subsidiary of Allianz SE, and RH Capital Associates
alleged Mayer Brown prepared false and misleading financial
documents for Refco that hid hundreds of millions of dollars in
company debt.
The New York-based 2nd U.S. Circuit Court of Appeals ruled last
year that Mayer Brown couldn't be held liable for the statements
because they were made by Refco, not the law firm.
The Supreme Court let that ruling stand without comment.
Collins was convicted on fraud charges in 2009 and sentenced to
seven years in prison. Former Refco Chief Executive Phillip R.
Bennett was sentenced to 16 years in prison in 2008 after pleading
guilty to a 20-count indictment.
The case is RH Capital Associates v. Mayer Brown LLP,
10-535.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com