This alert concerns two actions filed by a court-appointed receiver against a brokerage firm and a law firm, each seeking in excess of $10 million on behalf of investors in a limited partnership that was allegedly operated as a Ponzi scheme. The receiver’s complaint against the brokerage firm alleges that it negligently failed to detect the fraud of the general partner, Joseph S. Forte, and that had it not been for the brokerage firm’s alleged negligence, “the Ponzi scheme would have been uncovered years earlier.” As for the law firm, the receiver’s complaint alleges that it “enabled and facilitated the conduct of Forte” by failing to advise the partnership concerning registration and reporting requirements mandated by federal law.

Source: Financial Fraud Alert
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