Posted Aug 09, 2007 06:26 pm CDT
The legal fight over responsibility for the failure of commodities broker Refco has taken another turn, as a plaintiff now becomes a defendant.
A lawsuit by a Refco trustee contends that Thomas H. Lee Partners LP became aware of problems at Refco but covered them up so it could sell the company’s stock in an initial public offering, the Wall Street Journal (sub. req.) reports. Lee acquired a controlling stake in Refco in 2004.
Lee has itself filed a lawsuit over Refco’s collapse against Mayer, Brown, Rowe & Maw. The $245 million suit claims the law firm didn’t tell Lee about sham loan transactions. Mayer Brown has promised a vigorous defense.
But the latest suit, filed in federal court in New York, says Lee “had become aware of severe problems with Refco, its management, and its accounting.” Lee denies the claims.