Suing Your Broker’s Accountant

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Q: My broker-dealer has gone bankrupt.  Its employees are in jail – for fraud in the sale of securities, manipulation of initial public offerings and after-market trading, and for personal use of corporate credit.

I want to sue my broker’s accountant.  His deficient performance permitted the employees’ misconduct to continue undetected.  He failed to follow proper audit procedures, failed to comply with SEC rules and regulations and neglected to disclose the firm’s inadequate internal-fraud controls.

A: Under New York law, to prevail against the accountant, you must belong to a known group possessed of vested rights, marked by a definable limit and made up of certain components.  You must be part of an identifiable, particularized group rather than part of a faceless or unresolved class of persons.

Surely, the accountant prepared its audit reports for filing with the SEC and the NASD, as required under the law.  Even if you relied indirectly on their contents indicating that the firm was healthy, it is not likely that the accountant ever knew your identity.  Whatever liability this accountant may have under the law, it will not run directly toward you.

By: Scott Baron,
Attorney at Law Advertorial

The law responds to changed conditions; exceptions and variations abound. Here, the information is general; always seek out competent counsel. This article shall not be construed as legal advice.

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