Title:
AUDITORS’ DUTY TO DETECT AND TO RESPOND TO “RED FLAGS” INDICATIVE OF SECURITIES FRAUD: A CASE STUDY OF TAYLOR V. ROTHSTEIN KASS & CO., PLLC

Authors:
Stephen Errol Blythe, USA

Abstract:

This is a case study of Taylor v. Rothstein Kass & Co. It covers: (a) legal elements of a securities fraud claim; (b) red flags which may be indicative of securities fraud; (c) legal elements of a claim of an auditor’s professional negligence ; (d) the limitations period in an auditor’s professional negligence case; (e) effect of illegal activity of a client’s officers or directors on the professional negligence limitations period; (f) the pleading of causation of an auditor in a professional negligence case; (g) an auditor’s potential liability for aiding and abetting breach of fiduciary duties by the client’s officers or directors; (h) state anti-fracturing rules and their effect on auditor tort liability; (i) legal elements of a common law fraud claim; (j) the heightened pleading requirement in a fraud case; (k) legal elements of a fraudulent conveyance claim; (l) the applicability of a statute of repose on a fraudulent conveyance claim; (m) the pleading of facts evidencing fraudulent intent in a fraudulent conveyance case; (n) a party’s duty to exhaust all administrative remedies before attempting to depose the Securities and Exchange Commission; and (o) the remedy of disgorgement of all money reaped as a result of the fraud in a securities fraud case.