New York Law Journal Reports on Client’s Malpractice Suit Against Major Law Firm for Role in Chinese Deal
The New York Law Journal reported that Olshan client Brean Murray, Carret & Co. filed a malpractice suit against an international firm, claiming it failed to conduct proper due diligence that would have uncovered a fraudulent public stock offering by Puda Coal, a Chinese coal company. The two investment banks, Macquarie Capital USA, Inc. and Brean Murray, who engaged the same law firm as underwriter’s counsel, agreed to pay a combined $8.6 million to investors to settle allegations that the banks underwrote a fraudulent $108 million offering for Puda Coal. Both banks claim the law firm failed to conduct proper due diligence that would have uncovered the fraud, which involved a transfer of ownership by Puda directors that essentially rendered the company an empty shell at the time of the offering. The banks are seeking damages including the costs of the settling and defending the investors’ suit. Olshan Litigation partner Thomas Fleming and associate Nicholas Hirst are advising Brean Murray in its malpractice suit.