Magazine article The CPA Journal

Supreme Court Allows In-Person Solicitations by CPAs

Magazine article The CPA Journal

Supreme Court Allows In-Person Solicitations by CPAs

Article excerpt

Ethical standards of the accounting profession have been under review by the Federal Trade Commission (FTC) and the Department of Justice for some time. These organizations do not look with favor on bans that are anti-competitive. The position they take is that restrictions on advertising and solicitation are in opposition to normal market forces.

The view of the Justice Department which supports the spirit of the FTC/AICPA consent order is that a complete ban on advertising and solicitation violates antitrust law absent a state-action exemption. A state-action exemption provides a state with immunity from antitrust law if the restraint is clearly articulated, expressed, and administered by a state as state policy.

Four states (Florida, Georgia, Texas, Louisiana) have state statutes prohibiting in-person solicitation by CPAs. These statutes clearly prohibit what the AICPA now allows under its consent order with the FTC, namely, that it is permissible to solicit any potential client by any means, including direct solicitation. Twelve other states prohibit in-person solicitation by rule of accounting boards.


In the case of Fane v. Edenfield, 945 F.2d 1514 (11th Cir. 1991), the Florida statute and regulation prohibiting direct solicitation was challenged. The challenge was to be expected to determine how much restriction, if any, on the promotional efforts of CPAs is legally enforceable in light of the fact that the restraints may not be constitutional under the First Amendment of the Constitution which guarantees free speech.

The significance of the case is highlighted by the fact that the Supreme Court agreed to decide whether states may prohibit accountants from soliciting business in person. In the past the Supreme Court has ruled that commercial speech deserves substantial protection under the guarantee of the First Amendment but has allowed restrictions on commercial speech if they are narrow in scope and further an important state interest.


* There is a need to preserve and protect the public's ability to rely on the independence and objectivity of CPAs.

* Because there is no acceptable method of regulating in-person solicitation, a prophylactic rule against its utilization is necessary.

* A government may ban commercial speech that is more likely to deceive the public than to inform it.

* The relationship between the legislature's means and ends must be reasonable but does not require perfection.

* A state does not lose its power to regulate commercial activity deemed harmful to the public where speech is a component of the activity. Therefore, simply because Florida's regulation involves speech does not mean that the regulation must be struck down on constitutional grounds.

* The degree of protection afforded commercial speech is toward the low end of the scale.

* It is not the court's place to second guess state officials about their rules.

* States are largely free to regulate the professionals which they license.

* States may ban in-person solicitation because it inherently opens the door to fraud, undue influence, intimidation, and overreaching.

* With advertising, generally the recipient may simply turn away, but in-person solicitation may exert pressure and often demand an immediate response.


* It is unconstitutional to restrict [commercial] speech because it does not further the state's interest in regulating the accounting profession nor is it narrowly tailored to that end.

* Imposition of the ban upon CPAs but not on other professionals who perform the same tasks is a violation of equal protection.

* Commercial speech furthers the economic interests of the speaker while also informs the consumer audience.

* Dissemination of commercial information is a benefit to consumers and society. …

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