Gibson Dunn Sued By Funds that Collapsed Along With Refco
The trustee and liquidators for Sphinx Funds have sued Gibson, Dunn & Crutcher, claiming the law firm contributed to the funds’ $263 million loss when commodities firm Refco Inc. collapsed.
The suit claims Gibson Dunn had a conflict of interest when it represented Sphinx Funds at the same time it represented entities controlled by fund directors, the American Lawyer reports. The action also alleges that the law firm helped conceal that loans made by Refco to Sphinx directors were actually payments in exchange for business, the story says.
The suit was filed March 8 in New York state court. A defendant is seeking to transfer the action to federal court.
Refco’s October 2005 collapse has already landed another law firm in legal trouble. A trustee for creditors claims in a suit that Mayer Brown Rowe & Maw hid Refco’s financial problems in a 2005 initial public offering. The Securities and Exchange Commission has filed civil and criminal cases against a Mayer Brown partner that accuse him of hiding Refco debt from investors.
