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Proskauer, Chadbourne Not Liable For Ponzi Scheme


The law firms Proskauer Rose and Chadbourne & Park are not liable for the $7B Ponzi scheme perpetrated by R. Allen Stanford, ruled the Fifth Circuit Thursday.

Some 18,000 victims of the Ponzi scheme attempted to hold the law firms responsible, partly because of lawyer Thomas Sjoblom, who had worked at both firms and represented Stanford. Victims claimed the law firms had been aware of some of Stanford's fraudulent behavior and had obstructed an SEC probe, according to Reuters.

Reversing a lower-court ruling, the appeals court cited a Texas legal doctrine that lawyers have a right to "practice their profession, to advise their clients and interpose any defense or supposed defense, without making themselves liable for damages," according to the Wall Street Journal.

Two years ago, the US Supreme Court ruled that the former Stanford investors could sue law firms. [WSJ] [Reuters]