Liquidators for a pair of defunct Bear Stearns investment funds have sued Reed Smith, alleging malpractice and seeking $500m in damages, saying the law firm mishandled a financial crisis-era lawsuit against the major credit rating agencies.
The two Cayman Islands-based funds – which raised and fed capital to so-called master funds at Bear Stearns that, in turn, invested heavily in shoddy residential mortgage-backed securities (RMBS) and collateralised debt obligations – have turned to US litigation firm Reid Collins & Tsai to file suit against Reed Smith in Manhattan state court.
