Mayer Brown and Former Partner Escape Refco Shareholder Class Action

Mayer Brown and Former Partner Escape Refco Shareholder Class Action - 3-19-2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Mayer Brown and Former Partner Escape Refco Shareholder Class Action
Susan Beck

The American Lawyer. March 19, 2009
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EXCERPT: With Wall Street under attack and angry investors on a rampage for vengeance, law firms can breathe a little easier after a ruling by Manhattan federal district Judge Gerard Lynch in the Refco securities litigation. On Tuesday, Lynch dismissed claims against Mayer Brown and partner Joseph Collins, who represented Refco before and during its 2005 IPO. The judge offered a broad interpretation of the protection afforded law firms by the Supreme Court's ruling in Stoneridge. He concluded that even if Mayer Brown and Collins engaged in fraudulent activity on Refco's behalf, they were not liable to shareholders unless they made misstatements directly to them. The firm was represented by John Villa of Williams & Connolly; Collins had William Schwartz of Cooley Godward Kronish. The plaintiffs had alleged that Mayer Brown and Collins helped perpetrate a fraud at Refco by documenting loans that hid huge losses at the now-defunct brokerage giant. When Refco went public, Mayer Brown was one of two firms that drafted public documents for the IPO. Within weeks of going public, the company collapsed after the discovery of massive internal accounting fraud -- which Mayer Brown and Collins have always maintained they were unaware of. But Judge Lynch wrote that Mayer Brown's role drafting the IPO prospectus was irrelevant to the shareholder litigation. Instead, he said, the relevant question was whether investors "reasonably understood Mayer Brown to be speaking" through offering documents. And he concluded that shareholders could not have had that understanding: The prospectus, he found, represented the company's statement, not Mayer Brown's.

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