SEC to craft rules to protect corporations, executives and accounting firms from investor lawsuits

The SEC is beginning to craft rules to protect corporations, executives and accounting firms from investor fraud-related actions.

The New York Times reported that the Securities and Exchange Commission is rolling back a period of activity on the fraud front in order to counteract plaintiffs' claims that are themselves fraudulent.

'On Friday, the commission's chief accountant, Conrad Hewitt, told a group of securities lawyers at a conference in Washington that because there only four large accounting firms remain, the agency had begun to consider how to limit the legal liability of those firms in suits brought by investors and companies.

Mr. Hewitt said that he had witnessed numerous meritless lawsuits against auditing firms when he was the managing partner of Ernst & Young and that the potential claims against some firms were now so large that they could lead to bankruptcy and force further consolidation in an industry that was already heavily concentrated, audience members recalled.

Mr. Hewitt also said that five European countries had already found ways to limit auditor liability and that the European Commission issued a policy paper advancing the view that the biggest firms should be given new legal protection against damage claims, audience members said.

Some countries have put a monetary cap on legal liability, while others have adopted limits based on the size of the client corporation or the fees generated by the company being audited.'

The pendulum is apparently swinging back post-post Enron and Worlcom.

___________
Law Offices of Michael H. Cohen offers general corporate legal services, litigation consultation, and expertise in health law with a unique focus on alternative, complementary, and integrative medical therapies.

Michael H. Cohen is Principal in Law Offices of Michael H. Cohen and also President of the Institute for Integrative and Energy Medicine (also known as the Institute for Health, Ethics, Law, Policy & Society), a forum for exploration of legal, regulatory, ethical, and health policy issues involved in the judicious integration of complementary and alternative medical therapies (such as acupuncture and traditional oriental medicine, chiropractic, massage therapy, herbal medicine) and conventional clinical care. The most recent published book by Michael H. Cohen on health care law, regulation, ethics and policy pertaining to complementary, alternative and integrative medicine and related fields is Healing at the Borderland of Medicine and Religion. This is the fourth book in a series, following Complementary and Alternative Medicine: Legal Boundaries and Regulatory Perspectives (1998), Beyond Complementary Medicine: Legal and Ethical Perspectives on Health Care and Human Evolution (2000), and Future Medicine: Ethical Dilemmas, Regulatory Challenges, and Therapeutic Pathways to Health Care and Healing in Human Transformation (2003).

Health care and corporate lawyer Michael H. Cohen has also been admitted to the Bar of England and Wales as a Solicitor (non-practicing), adding to Bar membership in four U.S. states.
___________