Williams, who plays for Paris club Racing 92, was charged by police for allegedly buying cocaine last week and has been suspended by the club.
Read, who played with Williams in the national side, says it's a wake call to all past and present players of the standards expected of them.
"It's a reminder if you've been an All Black there's a brand or standard that needs to be kept," Read said.
"The All Blacks always want to keep standards high, it's important that you respect that.
"But if you make a mistake it's out there. It's disappointing."
Williams' arrest was the second blow to the reputation of his club and the All Blacks, with three-times World Player of the Year Dan Carter failing a drink-driving test in the French capital two weeks ago.
NZR chief executive Tew said he was also disappointed in the pair's behaviour.
"I think it's very disappointing for both of them, disappointing for the club that they now play for and disappointing for rugby and for the All Blacks," Tew said.
"Ali and Dan were looked after like any other player would be while they were in our employment ... but they left our employment some time ago.
"We expect very high standards of our players and our people when they're here with us. There's a certain legacy that you leave behind in the jersey and a certain responsibility you take away with it."
Former All Blacks winger John Kirwan, who coached Williams at the Auckland Blues, added the incidents had not been the best for the legacy of the team.
"The reality is that we have had a couple of instances lately that are not great for our All Blacks brand," Kirwan said on Sky Sports.
"Once an All Black, always an All Black and you carry that positively and negatively for the whole of your life. But it's normally 99 per cent positive and one per cent negative.
"So what are you doing out at 3am is not a positive ... nothing good happens at 3am."
Photo: RNZ / Rebekah Parsons-King