Report: Dewey Bond Offering Painted 'Rosy Picture,' Didn't Disclose Partner Guarantees
Dewey & LeBoeuf was able to raise $125 million in a bond offering in March 2010 that touted the firm’s “strong financial condition and conservative debt profile.”
The offering didn’t disclose pay guarantees used to lure and keep as many as 100 partners with the firm, according to the New York Times DealBook blog, which obtained a copy. The 58-page document “paints a rosy picture of Dewey, even as cracks in the firm’s finances were starting to show,” the story says.
Securities lawyers told DealBook that Dewey could face litigation because it failed to mention the guarantees. Some partners at the firm had pay packages worth more than $5 million a year.
In the past, Dewey has said its debt levels were not excessive. The firm raised money through the bond offering and had drawn $75 million on its credit line. The bond offering was a private placement, indicating sophisticated investors were buying the debt. Sources told DealBook that big insurance companies were the largest purchasers of the bond issue.
