Opinion ID: 1668702
Heading Depth: 2
Heading Rank: 2

Heading: Private Placement Memoranda

Text: We agree with the district court that the role of the attorneys in this case was similar to that of the independent auditors in KPMG. The claim is based on the attorneys' preparation of private placement memoranda and communications surrounding their production. [2] The memoranda disclosed information to MRI's shareholders and many potential investors. Like the independent auditors in KPMG, the attorneys intended that third parties would rely on the representations made in the memoranda. The legal services at issue, therefore, were not personal but involved publication of corporate information. In a similar context, securities lawyers have been held to owe a duty to the public. In Securities & Exchange Commission v. Spectrum, Ltd., 489 F.2d 535, 541-42 (2d Cir.1973), the Second Circuit held: The legal profession plays a unique and pivotal role in the effective implementation of the securities laws. Questions of compliance with the intricate provisions of these statutes are ever present and the smooth functioning of the securities markets will be seriously disturbed if the public cannot rely on the expertise proffered by an attorney when he renders an opinion on such matters. See also Kline v. First W. Gov't Sec., Inc., 24 F.3d 480, 485-86 (3d Cir.1994) (concluding that attorneys may be liable [to investors] for both misrepresentations and omissions where the result of either is to render an opinion letter materially inaccurate or incomplete); Felts v. Nat'l Account Sys. Ass'n, Inc., 469 F.Supp. 54, 67 (N.D.Miss.1978) (The lawyer for the issuer plays a unique and pivotal role in the effective implementation of the securities laws. As a result, special duties are imposed on the lawyer.). As these examples illustrate, lawyers often have public duties beyond those owed to the clients. The attorneys in this case produced the private placement memoranda knowing they would be distributed to the public and that potential investors would rely on them.