Second Circuit Decision “Squarely Holds” Accountants May Be Primarily Liable Under Federal Securities Laws


In a decision issued yesterday, the Second Circuit held that an accountant has a duty to correct its certified opinions, and may incur primary liability under § 10(b)

and Rule 10b-5 if it fails to fulfill that duty in certain circumstances. The decision, written by C.J. Straub, claims to be the first in this Circuit to squarely hold that an accountant has such a duty or may be primarily liable under federal securities laws. The auditor in this case is Todman & Co., CPA, P.C., and its successor in interest, Trien, Rosenberg, Rosenberg, Weinberg, Ciullo & Fazzari,


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