Professional Liability

Our litigators have represented Big 4 and other large accounting firms in dozens of important matters, including in securities class actions, trustee litigation, lender suits, client claims of negligence, and in PCAOB and Securities and Exchange Commission investigations. Some recent examples include:

  • Represented a Big 4 accounting firm in a series of consolidated securities class actions claiming that the accounting firm committed securities violations during its audits of an international manufacturer. All claims were dismissed on the grounds of international comity.
  • Represented a Big 4 accounting firm in an action brought by the Liquidating Trustee of a specialty finance company. The Liquidating Trustee sought in excess of $300 million related to claims for professional malpractice, breach of contract, negligent misrepresentation, fraud, aiding and abetting fraud, aiding and abetting breach of fiduciary duty and deepening insolvency. The Court dismissed the aiding and abetting fraud claim, and the Trustee subsequently dropped its claims for fraud and deepening insolvency. Summary judgment was granted on all remaining claims. The Second Circuit affirmed the order granting Summary Judgment.
  • Represented a Top 20 accounting firm in a Madoff-related suit in the S.D.N.Y. brought by limited partners in a sub-feeder fund. The motion to dismiss was granted on all claims.
  • Represented a Big 4 accounting firm in litigation brought by a limited partner in a real estate limited partnership claiming that the limited partnership and other defendants committed fraud by not providing appropriate amounts of distributions as required. The motion to dismiss was granted on all claims.
  • Represented Big 4 accounting firm in an action by one of the world’s largest banks on behalf of a syndicate of lenders seeking over $50 million for alleged negligent misrepresentation related to the bankruptcy of a borrower, and subsequent discovery that the borrower’s CFO had submitted false borrowing base reports to the lenders.
  • Represented a Big 4 accounting firm in a fraud suit filed by purchasers of an entity for whom the firm had performed due diligence services. Plaintiff claimed that the acquisition target had adopted an improper revenue recognition methodology and fraudulently concealed the financial condition of the company in preparation for a sale, and that the accounting firm made fraudulent misrepresentations in its Report and in discussions that helped the majority shareholders fraudulently obscure the acquisition company’s true financial condition.
  • Represented a Big 4 accounting firm in an action by a bankruptcy trustee for a failed airline that filed for bankruptcy. The bankruptcy case was converted to a Chapter 7 liquidation and Plaintiff filed suit on behalf of a number of creditors alleging claims for fraud and negligence. After several motions in limine were granted in favor of the accounting firm, the bankruptcy trustee settled the matter on the eve of trial for less than 2% of the amount sought.
  • Represented an outside auditor in more than a dozen class and individual lawsuits in Multidistrict Litigation, asserting Section 10(b) and Section 11 claims. A Motion to Dismiss was partially successful, with the Section 11 claim dismissed on statute of limitations grounds. The case ultimately settled for less than 1/3 the national average for cases of this size.
  • Represented an outside auditor in consolidated shareholder and bondholder class actions arising out of the bankruptcy of a specialty finance company that lent money to health care providers. The class actions asserted claims for securities fraud under Section 10(b) of the Securities and Exchange Act. Obtained a favorable settlement prior to trial that was less than the anticipated costs of trial.
  • Represented a Top 20 accounting firm in consolidated lawsuits by former tax services clients, asserting gross negligence, breach of contract and misrepresentation claims. Case settled on favorable terms.
  • Representing a Top 20 accounting firm in a case brought by a bank client and certain of its shareholders, alleging that the accounting firm committed negligence and gross negligence in performing services for the bank, which allegedly caused damages to the bank and shareholders. After the court granted defendants’ motion to dismiss, plaintiffs filed an amended complaint. The trial court dismissed two of the three claims brought by plaintiffs, including the entirety of the shareholders’ claim. The sole remaining claim was settled on favorable terms at mediation required under the terms of the contract.
  • Represented an accounting firm in a lawsuit brought by a non-profit client over the theft of funds by an employee of the non-profit over a three-year period.
  • Represented an accounting firm in an action brought by a third party over the firm’s books and records review that determined that over $80 million was due its client under a stock purchase agreement. The third party sued the accounting firm for (1) fraud, (2) breach of confidentiality agreement, (3) misappropriation of trade secrets, (4) conversion, and (5) to enjoin the accounting firm from turning over any materials from their review to their client. We obtained a stay of all proceedings pending resolution of the litigation between the third party and the client. Plaintiffs later discontinued the action with prejudice.
  • Represented audit firm with respect to the appropriate response to PCAOB Comment Letter regarding the firm’s internal and quality controls.
  • Represented an individual audit partner in a PCAOB enforcement action and negotiated a settlement on his behalf.
  • Represented the outside auditor of a bank in an FDIC investigation into the causes of the bank’s failure. No claims brought against accounting firm.
  • Represented a law firm in multiple actions seeking millions of dollars pursuant to Pennsylvania’s wrongful use of civil proceedings statute. While motions for summary judgment were pending and motions in limine were being argued, the matter settled on favorable terms.