On February 15, 2023, Justice Borrok of the New York County Commercial Division issued a decision in Sharp v. Duff & Phelps, LLC, 2023 NY Slip Op. 30481(U). dismissing claims based on the in pari delicto defense, explaining:
In pari delicto bars the claims asserted on behalf of DLI and the Master Fund. The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers. It bars a party that has been injured as a result of its own intentional wrongdoing from recovering for those injuries from another party whose equal or lesser fault contributed to the loss.
The Plaintiffs’ claims brought on behalf ofDLI and the Master Fund are barred by in pari delicto. As discussed above, DLI inflated NA V so that it could charge more fees. Duff & Phelps allegedly rubber-stamped. DLI cannot now claim against Duff & Phelps by virtue of their alleged contribution to this fraud. However, for completeness, in pari delicto would not bar the claims brought by DLI Capital, DLIF, or DLIFF. These are the feeder funds who paid the asset management fees based on the over-inflated NAV.
(Internal citations omitted).