Accountants Oppose Private Suits Over 'Reckless' Aid To Fraud
By Fawn Johnson, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The American Institute of Certified Public
Accountants is protesting a provision in a Senate financial-overhaul bill that
would give investors an expanded ability to sue people who help commit
securities fraud.
In a letter sent Wednesday to the bill's sponsor, Senate Banking Committee
Chairman Chris Dodd (D, Conn.), the accounting association says the provision
would lower the current legal standard for aiding and abetting cases "from a
standard of 'knowingly' committing a violation to mere 'reckless' behavior."
Dodd's bill would permit private civil actions for any person who "knowingly
or recklessly provides substantial assistance" to others committing securities
fraud.
"Because recklessness is not defined, and as a practical matter is a vague
standard, this change alone would result in a significant increase in
litigation," the letter says. It was also addressed to the committee's ranking
Republican, Richard Shelby of Alabama.
The letter also says the provision in Dodd's bill goes against a 2008 decision
by the U.S. Supreme Court that Congress had given the Securities and Exchange
Commission the authority to pursue those who aid and abet, but lawmakers
specifically hadn't authorized private rights of action.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com
(END) Dow Jones Newswires
11-19-091327ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|