Dreade Locke

What happens when a top law firm gets two crooks for clients? At Locke, Liddell, and Sapp, the result was a $30 million settlement for angry investors.

Locke Purnell Attorney Jane Matheson’s note on the back of a trade agreement her firm was editing for client Russell Erxleben in February 1998 got right to the point: “Tell the truth.” Erxleben, an All-American punter and place kicker for the University of Texas Longhorns in the seventies, had enlisted the 110-year-old, blue-chip Dallas law firm to keep his company, Austin Forex Investments ( AFI), from running afoul of state and federal securities regulations. AFI made its money through short-term investments in the volatile foreign-currency market, and it had a fiduciary duty to be open and honest with its investors. If, for example, AFI was telling clients that the company was doubling their money when it was really millions in the hole, then it was committing securities fraud.

This hypothetical example turned out to be the case. Seven months

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