NY Federal Court Rules Auditors Strictly Liable for Their “Opinions”
by Michael Cifelli on September 23, 2013
Ernst & Young and PriceWaterhouseCoopers will not be dismissed from the securities classaction lawsuit involving Overseas Shipholding Group, Inc. (OSG). The two firms provided auditing services to the now defunct company.
The case revolves around OSG’s public offering of three hundred million dollars of unsecured notes. In connection with the transaction, OSG filed a Shelf Registration Statement and Prospectus that allegedly failed to disclose tax liability under Section 956 of Section F of the Internal Revenue Code.
Both Ernst & Young and PriceWaterhouseCoopers signed the Registration Statement. They also “expressly consented to having their unqualified audit opinions for OSG’s financial statements for years 2007 through 2009] incorporated by reference into the Registration Statement.” OSG later filed for bankruptcy, which included an Internal Revenue Service claim of $35 million in unpaid corporate taxes.
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