Refco Suits Depend on Pending Case

A lawsuit accusing Mayer, Brown, Rowe & Maw of aiding the collapse of commodities brokerage firm Refco could turn on a pending U.S. Supreme Court case.

The suit against Mayer Brown claims the law firm helped prepare documents for false transactions that covered up fraud, according to a column in the New York Times (sub. req). The Supreme Court case, StoneRidge Investment Partners v. Scientific Atlanta Inc., seeks to hold third parties liable for so-called “scheme liability.” (See “An Outside Shot at Securities Fraud,” in the June ABA Journal for more information on the case.)

The Supreme Court court could rule that third parties may be liable. “Or it could agree with other lower courts who conclude that lawyers have no duty to speak, and therefore cannot be liable if they fail to point out a fraud,” the Times says.