Not looking at it from a market risk but from a legal risk. If an investment bank were to underwrite a billion dollar deal and it turns out that as part of their due diligence they either missed something or downplayed the legal issues they would more than likely be on the hook for the billion not just the underwriting fees.
Lets just say that this is a pyramid scheme...I am not but lets just say it is. As part of the underwriting process for any deal a company has a certain amount of due diligence that they need to conduct. One of which I am sure has to do with everything that Bill claims. If they participate in the deal and sell it to clients and then the FTC closes the business you would expect anyone who purchased the deal to put it back to the underwriter at a minimum. Why would a wall street firm risk their neck in underwriting a deal for company on the verge of being shut down. Makes no sense to me.