Refco Lawyer’s Indictment ‘a Wake-Up Call’
Posted Dec 20, 2007 8:38 AM CDT
By Debra Cassens Weiss
The indictment of a Mayer Brown partner in connection with the collapse of Refco has some transactional lawyers worried.
Some saw the indictment of Joseph Collins as an indication that other transactional lawyers could face legal problems for their representation of clients in initial public offerings, the New York Law Journal reports. Collins has been charged with aiding and abetting securities fraud for allegedly helping Refco hide damaging financial information from investors.
"It's definitely a wake-up call," partner Mark Vecchio of Venable in New York City told the publication. "I'm sure a lot of lawyers read about this in the morning papers and said, 'Oh my God.' "
Another anonymous observer, described as a prominent corporate lawyer, cited fears of government overreaching. "When the economy takes a hit, there is a tendency to look for scapegoats to be taken out and shot," he said.
But many lawyers said Collins may have crossed a line—one they themselves have not overstepped. Vecchio acknowledged that is a possibility. “He may just be a bad apple," he said.
The legal publication’s story says U.S. Attorney Michael Garcia appeared intent on allaying lawyers’ fears in announcing the indictment. Garcia said Collins “was not merely a lawyer whose client was committing fraud and who should have caught on," the story reports. "Collins instead played an active and crucial part in perpetrating the Refco fraud," Garcia alleged.