Mayer Brown Bids To Toss Final Claim In Refco Suit

Mayer Brown Bids To Toss Final Claim In Refco Suit - 4/13/2009

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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 Bids To Toss Final Claim In Refco Suit
Erin Marie Daly

Securities Law 360. April 13, 2009
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EXCERPT: Mayer Brown LLP has moved to throw out the sole claim remaining against it in a lawsuit brought by a group of investment funds in connection with the collapse of brokerage firm Refco Inc., saying the plaintiffs have failed to plead fraud with particularity, among other things. In an answer filed Thursday in the U.S. District Court for the Southern District of New York, Mayer Brown argued that the first amended complaint by investment funds associated with Thomas H. Lee Partners LP should be dismissed because the plaintiffs couldn’t have reasonably relied on representations allegedly made by the firm’s attorneys as Refco’s principal outside counsel. The plaintiffs invested more than $450 million in Refco and acquired a majority of the company's stock through a leveraged buyout in August 2004. When Refco collapsed in the fall of 2005, the plaintiffs allegedly lost more than $245 million, prompting them to accuse Mayer Brown of making numerous misrepresentations in connection with the buyout. Mayer Brown said in its filing that its attorneys didn’t proximately cause or contribute to any damage, loss or injury allegedly sustained by the THL funds. In rendering services to Refco, Mayer Brown said, its attorneys reasonably relied upon representations and information provided by the brokerage firm. Moreover, if the plaintiffs’ allegations were true — which Mayer Brown said it denied — then Mayer Brown itself was the victim of fraud at the hands of Refco, the filing stated. The plaintiffs were barred from recovering on any of the claims alleged against Mayer Brown, the firm added, because “Mayer Brown owed no duty of disclosure to them.” “Mayer Brown attorneys were required by [the firm’s] professional obligations and the ethical rules of the legal profession to maintain the confidentiality of the matters on which it worked for Refco,” the filing said.

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