Officials turn attention to law firms to recover money lost in Texas Ponzi scheme

In the past week, two major law firms have found themselves entangled in bankruptcy and receivership proceedings stemming from the aftermath of the R. Allen Stanford Ponzi scheme. A court appointed receiver for R. Allen Stanford’s investment firm has sued the two Texas firms Proskauer Rose and Chadbourne & Park as well as Thomas Sjoblom, a former SEC attorney and former partner of the two law firms, in U.S. District Court in Dallas, Texas for aiding in the operations of the Ponzi scheme and for obstructing the investigations of the SEC.

The complaint alleges that Thomas Sjoblom aided in the sales of phony certificates of deposit and then spent “four years delaying and obstructing the investigation by lying to the SEC.” The two law firms named in the suit are implicated through their failures to properly supervise Mr. Sjoblom while he worked for each firm respectively.

Should the allegations of this suit prove to have merit, the State Bar of Texas could take disciplinary actions against all three parties. Mr. Sjoblom may face sanctions under Rules 3.03 and 3.04 of the Texas Rules of Professional Conduct for lying to the SEC and obstructing their investigation. Proskauser Rose and Chadbourne & Park may face disciplinary sanctions under Rule 5.01 of the Texas Rules of Professional conduct if they knew of Mr. Sjoblom’s actions and either permitted the actions or failed to take reasonable remedial actions.

​With the facts alleged in the complaint, do you think the two firms are subject to Texas Rule of Professional Conduct 5.01?

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