Accountants Liability Representations

Some of our significant accountants liability representations include:

  • obtained arbitration award for reimbursement and indemnification of legal fees and expenses incurred by accounting firm defending against lawsuits brought by minority shareholders of former client, who alleged that the former client used the results of the accounting firm’s valuation to force out the minority shareholders
  • obtained dismissal of a shareholder class action, filed under the federal securities laws, alleging that the accounting firm failed to perform its audit in accordance with generally accepted auditing standards
  • obtained dismissal of a series of consolidated class actions filed under the federal securities laws based on the grounds of international comity. The court ruled that the litigants had primary contacts in another country and minimal contacts with the United States. Plaintiffs appealed dismissal, and, after being ordered into a federal appellate court mediation program, the case was settled in full, and the appeal was dismissed with prejudice
  • obtained summary judgment, which was affirmed on appeal, in favor of an accounting firm sued by a third party claiming that the accounting firm owed a duty to it such that it could reasonably rely upon the accounting firm’s alleged oral statements concerning the financial condition of the accounting firm’s audit client
  • obtained dismissal of conspiracy and fraud claims on a motion to dismiss—and later obtained summary judgment on breach of fiduciary duty, breach of contract, professional negligence and tortious interference with business relationships claims—arising out of allegations that an accounting firm conspired with a potential financing source to force plaintiff into bankruptcy, so that the financing source could gain control of plaintiff
  • obtained dismissal of accounting malpractice claims alleging that the accounting firm had fraudulently and/or negligently recommended sham tax shelter investments
  • obtained closing of SEC investigation, following the filing of multidistrict securities class actions against accounting firm, with no enforcement action taken against accounting firm or any of its auditors
  • achieved closing of DOJ criminal perjury investigation with no charges brought against the senior manager of an accounting firm and obtained favorable settlement in SEC enforcement action against the senior manager in which no findings were made against the senior manager, no money was paid by him, no disciplinary action was taken against him and he was not subject to an antifraud injunction
  • represented five members of an audit engagement team in the DOJ’s criminal prosecution of an accounting firm and its grand jury investigation of the accounting firm’s client, in the SEC investigation of both as well as before several congressional committees. None of our clients was ever charged criminally or civilly, nor was any required to settle with any agency or subjected to any professional sanction or discipline
  • obtained favorable settlements in several multidistrict securities class actions and suits alleging common-law claims of fraud, negligent misrepresentation and other common-law theories of liability, all of which were significantly below the national average for cases with similar exposure
  • represented numerous accountants and accounting firms before various state boards of public accountancy relating to, among others, the following substantive issues:
    • alleged failure to properly audit historical financial statements
    • alleged negligence in failing to properly staff audit engagements
    • alleged failure to assign audit team members with the appropriate training or experience
    • alleged independence violations
    • alleged malpractice in tax advice and income tax preparation
    • alleged failure to detect fraud
    • alleged failure to detect inadequate internal controls
    • alleged failure to perform adequate investigation of potential clients prior to engagement
    • alleged failure to possess the skill and knowledge normally possessed in good standing in similar community
    • alleged failure to properly report income and expenses

Our Accountants Liability Team is frequently invited to speak at the industry’s top events on hot topics including:

  • “Legal Implications of Financial Reporting,” Association of Corporate Counsel, Delaware Valley Chapter, May 2010
  • “Recent Securities Litigation Developments,” PBI’s 12th Annual Federal Securities Law Forum, April 2009
  • “New Litigation Threats to the Accounting Profession and Avoiding Self-Inflicted Wounds,” Philadelphia, January 2009
  • “Securities Liability in Turbulent Times: Practical Responses to a Changing Landscape,” PBI/Philadelphia Bar Securities Regulation Committee Program, January 2009
  • “Ten Practice Pointers for Handling Securities Litigation Post-Dura, Tellabs and Stoneridge,” PBI Fourteenth Business Lawyer’s Institute, November 2008
  • “Accountants Liability: Avoiding Self-Inflicted Litigation Wounds,” New York, June 2008
  • “New Litigation Threats to the Accounting Profession,” The Penn Club of New York, October 2007
  • “New Developments in Securities Litigation,” PBI’s Thirteenth Annual Business Lawyers’ Institute, October 2007
  • “New Litigation Threats to the Accounting Profession,” Philadelphia, June 2007
  • “Malpractice Liability of Accountants Under Securities Laws,” SMU School of Business Presentation, November 1997