A Pandora's Box For Kidder?

The Lynch Report may backfire on Kidder Peabody, perhaps allowing plaintiffs with a beef against the firm to obtain sensitive Kidder documents. This latest headache for new CEO Dennis Dammerman is ironic: The report by Kidder outside counsel Gary Lynch was a boost for the securities house, clearing management of any involvement in the Joseph Jett bond trading scandal.

But in an Aug. 16 letter to the firm, a New York lawyer for two ex-employees with arbitration claims uses the report as legal leverage to get materials that might bolster his cases. Attorney Jeffrey Liddle argues that by making the report public, Kidder has waived all claims of confidentiality, work-product, and attorney-client privileges--"in perhaps the most colossal waiver of such privileges ever." Liddle represents Linda LaPrade and Russell Shepard in disputes unrelated to the Jett affair.

For Kidder, the peril is that more unflattering details could surface. Already, the report contains serious contradictions, such as differing versions about whether Kidder honcho Edward Cerullo knew about Jett's trading. Kidder had no comment.

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