September 25, 2020

According to This, Suing Auditors Is Trendy Now

According to a Cornerstone Research report that you should absolutely read in its entirety if you are into this sort of stuff, lawyers are suing auditors more:

Overall, auditor participation in class action settlements in the last several years has been lower than in the early years following passage of the Private Securities Litigation Reform Act (PSLRA). This is likely due in part to U.S. court decisions that have reduced auditor liability, as well as the changing nature of restatements. The latter is due to the fact that auditor liability in securities class actions is closely tied to whether audited financial statements were restated, as well as the nature of any restatement.

  • Reflecting an increase over the last couple of years, auditors were named as defendants in 12 out of 44 accounting cases that settled in 2013. This is due in part to the fact that auditors have been named more frequently in CRM cases (6 out of the 14 CRM settlements in 2013 involved auditors as named defendants).
  • Cases involving auditors as named defendants tend to settle for higher amounts.

And look! Here's a fancy chart:

We'll dig deeper into the full report later, just wanted to share this bit with you.

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