Judge Dismisses Trustee’s Suit Against Mayer Brown
Posted Apr 16, 2009 9:44 AM CDT
By Debra Cassens Weiss
A federal judge has dismissed a bankruptcy trustee’s suit that had contended Mayer Brown helped failed brokerage firm Refco hide its financial problems in an initial public offering.
The suit by trustee Marc Kirschner had maintained that Mayer Brown, acting with two accounting firms and several of the company's investment banks, helped Refco insiders profit at the expense of shareholders.
U.S. District Judge Gerard Lynch ruled that the trustee lacked standing to bring the suit against Refco and the other defendants, the Am Law Daily reports.
"The threshold question is whether the litigation trustee, standing in the shoes of Refco, lacks standing to bring suit to recover for damages arising from a fraudulent scheme devised and carried out by Refco's own senior management," Lynch wrote. "Because a trustee cannot sue to recover for a wrong undertaken by the debtor itself, the motions to dismiss will be granted in their entirety."
Last month Lynch tossed a shareholder class action against Mayer Brown, ruling the law firm was protected from aiding and abetting allegations by the U.S. Supreme Court’s ruling in Stoneridge Investment Partners v. Scientific-Atlanta. Partner Joseph Collins still faces criminal charges in the Refco fallout, and Mayer Brown still faces a suit by the buyout fund that bought a majority stake in Refco, the Am Law Daily reports.