In re Refco, Inc. Securities Litigation
United States District Court for the Southern District of New York
609 F.Supp.2d 304 (2009)
Refco, Inc. (Refco), a brokerage and clearing firm, hid mounting losses from defaulted customer loans by routing them through a subsidiary that made "round-trip loans" to itself via third parties; outside counsel Mayer Brown Rowe & Maw LLP (Mayer Brown) participated in 17 of these loans by drafting documents, explaining transaction details to prospective third-party participants, and negotiating terms. When Refco's uncollectible debt became public and investors lost millions, a class of investors sued Mayer Brown under § 10(b) of the Securities Exchange Act and related securities laws, and Mayer Brown moved to dismiss.
Whether there is a private right of action against a law firm for aiding and abetting a principal actor who substantially and knowingly makes material misstatements or omissions in violation of federal securities laws.