Sullivan & Cromwell office sign. Courtesy photo Sullivan & Cromwell Didn't Ignore FTX Red Flags, Second Examiner Report Concludes
FTX Group's in-house counsel withheld information in communications with Sullivan & Cromwell that prevented the law firm from seeing red flags, the report stated.
September 25, 2024 at 04:31 PM
4 minute read
What You Need to Know
- A second report from the court-appointed examiner in the FTX bankruptcy cleared Sullivan & Cromwell of a disqualifying conflict of interest in the firms' pre-petition work for Sam Bankman-Fried in his acquisition of Robinhood shares.
- The report also found that the firm was neither aware of red flags in FTX's books nor responsible for recognizing them, based on the information Sullivan & Cromwell partners received from FTX Group attorneys.
- Sullivan & Cromwell has billed more than $200 million in the matter since it placed FTX in bankruptcy in November 2022.
After an initial inquiry cleared Sullivan & Cromwell of allegations that the firm knew—or should have known—of the fraud at FTX prior to representing the company as debtors counsel, a second report from a bankruptcy court-appointed examiner cleared the law firm of a disqualifying conflict of interest in the case.
Wednesday's report from independent examiner Robert J. Cleary of Patterson Belknap Webb & Tyler found no disqualifying conflict of interest in Sullivan & Cromwell's pre-petition work helping FTX founder Sam Bankman-Fried acquire the shares of the Robinhood trading platform, which Cleary described as regulatory in nature.
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