Klien v. Boyd Fed. Sec. L. Rep.

90,136 (1998)

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Nature of the Case

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Facts

Boyd (Ds) made a partnership to purchase a securities broker. Coleman (D), who had a long history of securities fraud, joined in the partnership. Ds hired Drinker Biddle & Reath (D1), attorneys at law, to assist with the transaction. D1 created the legal documents D used to purchase the business. Those documents included a partnership agreement, a subscription agreement, and a disclosure letter. Klein (Ps) invested in Mercer LP. The disclosure package delivered to Ps and prepared by D1 failed to include Coleman’s extensive history of fraud, misrepresentations, and securities violations. Mercer LP failed, and Ps sued Ds alleging violations of §10(b), Rule 10b-5, and RICO. The district court granted D1’s motion for summary judgment, and plaintiffs appealed.