New York (May 22, 2003) -- As the stock market tanked, claims against CPAs rendering investment advice soared, an attorney warned accountants attending a Broker/Dealer Conference here this week.
“When clients lose money, they sue. You can be sued, your partners can be sued, and your firm can be sued if you render investment advice,” Howard S. Eilen, partner with Lehman & Eilen in Uniondale, N.Y., warned attendees at Tuesday’s conference, sponsored by the New York CPA Society's Foundation for Accounting Education. “Claims are being filed at a record pace…customers are winning.”
In 2002, awards totaling $116 million were granted to investors, Eilen said. Mutual fund claims have risen 1,000 percent from 1999. According to Eilen, the most predominant mutual fund claims involved suitability, sales charges, break points and switching.
CPAs providing investment advice should update client profiles on a regular basis and should meet with clients in person to review their portfolios at least yearly, Eilen advised. In addition, he recommended that CPAs keep notes from those meetings, as well as due diligence reports and research on the investments they recommend. He also urged practitioners to avoid B shares, which he said are often involved in suitability claims.
-- Melissa Klein
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access