In re American Continental Corp./Lincoln Savings and Loan Securities Litigation (Jones Day)
United States District Court for the District of Arizona
794 F.Supp. 1424 (1992)
- Written by Craig Conway, LLM
Facts
Five separate actions for securities fraud were consolidated in federal district court. Among the claims was that the law firm of Jones, Day, Reavis & Pogue (Jones Day) (defendant) actively engaged to cover up regulatory deficiencies created by its client, American Continental Corporation (ACC) (defendant), a company that owned Lincoln Savings and Loan (Lincoln) (defendant). A Jones Day partner, William Schilling (defendant), previously worked as director of the Federal Home Loan Bank Board (FHLBB) where he noted that Lincoln had suffered serious regulatory violations. After joining Jones Day, however, Schilling and another partner visited ACC to conduct a regulatory compliance audit of Lincoln’s operations. After finding several violations, Schilling and Jones Day instructed Lincoln on how to rectify the serious problems so they could not be uncovered. Additionally, Jones Day had knowledge that Lincoln had committed fraudulent activities, consented to the destruction of certain documents, and was aware that Lincoln failed to make the required corrections. Jones Day filed a motion for summary judgment, arguing that it could not be held liable for counseling its client.
Rule of Law
Issue
Holding and Reasoning (Bilbey, J.)
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