AICPA Files Briefs in Securities and Malpractice Cases

By Miller, Richard I. | Journal of Accountancy, April 2007 | Go to article overview

AICPA Files Briefs in Securities and Malpractice Cases


Miller, Richard I., Journal of Accountancy


From time to time, the AICPAs Office of General Counsel files amicus curiae (friend of the court) briefs in matters that could affect the profession. I would like to inform you of two such recent filings. The first was to the U.S. Supreme Court; the other was to the New York Court of Appeals, that state's highest court.

In January 2007, the U.S. Supreme Court agreed to hear a case out of the Seventh Circuit, Tellabs v Makor & Rights, Ltd., 437 F.3d 588 (7th Cir., 2006), to address an important and recurring issue in securities litigation:

   Whether, and to what extent, a court must consider or weigh
   competing inferences in determining whether a complaint
   asserting a claim of securities fraud has alleged facts sufficient
   to establish a "strong reference" that the defendant acted with
   scienter (knowing fraud or recklessness), as required under
   the Private Securities Litigation Reform Act of 1995.

While the various circuits have adopted somewhat different views of the proper standard, all but the Seventh Circuit required the trial court to consider all inferences that could arise from the facts pleaded by plaintiffs--that is, those that are supportive of a finding of scienter and those that support benign explanations of the allegedly fraudulent conduct and tend to negate scienter. Indeed, some courts have held, for example, that the inference of fraudulent conduct had to be the "most plausible" reference from the facts in order for such inference to be "strong."

Although this case did not involve an accounting firm, the AICPA, along with six accounting firms, realized the potential importance of the issue to the profession, and collectively filed a friend of the court brief. The brief argues that the plain language of the law requires that facts be pleaded in the complaint that are sufficient to give rise to a strong inference that the defendant acted with the required state of mind, and it follows that when the facts pleaded can give rise to an inference of innocent or even negligent conduct, those same facts cannot constitute a strong inference of scienter.

Numerous amicus briefs have been filed in support of the position advanced by the profession, including a brief filed by the United States which, like our brief, urged rejection of the standard adopted by the Seventh Circuit and the adoption of a very high pleading standard. The Supreme Court is expected to hear oral arguments on March 28 and a decision is anticipated by the end of June.

This brief was drafted on our behalf by Gibson, Dunn & Crutcher LLP--Theodore B. Olson, counsel of record, Scott A. Fink, Douglas R. Cox, Mark A. Perry and Minodora D. Vancea on the brief.

On Feb. 5, the AICPA and the New York State Society of CPAs moved the New York Court of Appeals for permission to file a friend of the court brief in Williamson v. PricewaterhouseCoopers LLP (Index No. 602106/04). We wanted to participate in this case because it involved applying the continuous representation doctrine to toll the three-year statute of limitations governing audit malpractice claims. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

AICPA Files Briefs in Securities and Malpractice Cases
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.