Stephens Inc., Others Ask Supreme Court to Reverse Bond Ruling

Six groups, including Stephens Inc. of Little Rock and the Arkansas State Chamber of Commerce, have flooded the Arkansas Supreme Court with briefs supporting the reversal of a circuit court decision they say would upend the state's bond market.

At issue is a March 22 ruling by Pulaski County Circuit Judge Wendell Griffen that said bond attorneys aren't liable for misrepresentations in bond disclosure documents.

"What they're saying is if this judgment is allowed to stand, that bond council can go out and misrepresent the facts in the disclosure documents with no liability," Little Rock attorney Thomas Thrash told Arkansas Business.

Thrash represents First Arkansas Bank & Trust of Jacksonville, which is appealing the ruling.

"That's going to have a drastic effect on the bond market," he said. "Who's going to buy the bonds if you know the bond counsel has no responsibility for the integrity of the transaction?" 

Stephens, the Arkansas Bank Department, the state Chamber of Commerce, the Arkansas School Boards Association, the Arkansas Securities Department and the Arkansas Development Finance Authority each filed briefs on Monday calling for a reversal of the ruling.

The case stems from a 2008 lawsuit where First Arkansas sued the Gill Elrod Ragon Owen & Sherman law firm over a bond transaction for which Gill Elrdon was bond counsel.

First Arkansas alleged that the law firm didn't disclose a $5 million first mortgage lien that First Federal Bank had on the bond issue.

Griffen ruled in favor of Gill Elrod on March 22, saying that the Arkansas Securities Act doesn't cover bond attorneys.