The Securities and Exchange Commission is beginning to move to protect accounting firms from investor lawsuits that accuse them of fraud, according to published reports.The New York Times reported that last week, the SEC filed a brief in the Supreme Court asking the justices to consider the adoption of a legal standard to make it harder for shareholders to win judgments in fraud lawsuits against publicly traded companies and their executives.
Meanwhile, SEC chief accountant Conrad Hewitt was speaking to securities lawyers at a Washington conference, saying that the agency was considering ways to protect accounting firms from large damage awards in cases brought by investors and companies. Hewitt said that he saw many frivolous lawsuits during his time as an Ernst & Young managing partner, and that a handful of European countries had already found ways to limit auditor liability. The European Commission has also issue a policy paper suggesting that damage claims protections should be afforded to the biggest firms.
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