Judge Tosses Refco Trustee’s Suit Against Mayer Brown

A federal judge has dismissed a lawsuit by a bankruptcy trustee against Mayer Brown and two accounting firms stemming from the collapse of the brokerage firm Refco.

U.S. District Judge Gerard Lynch said the pleadings by trustee Marc Kirschner failed to allege enough facts showing the defendants actually knew of or substantially assisted in the fraudulent diversion of assets that led to Refco’s collapse, according to Reuters and Bloomberg News. The other defendants are Ernst & Young and Grant Thornton.

Kirschner filed the suit on behalf of Refco’s currency-trading customers.

Lynch said it was "puzzling" that Kirschner had filed the complaint, since it was similar to one found "wholly inadequate" in a prior case. However he gave Kirschner the opportunity to refile, citing his access to a “treasure trove” of documents. "It is far from clear that repleading would be futile,” Lynch said.