Accountant Liability 3 of 3 (28)

Question 1

Liability Under the 1933 Act

Answer 1

The ability of a plaintiff, with or without privity, to recover against an auditor under the Federal Securities Act of 1933 if the plaintiff can prove that the financial statements were Materially misstated and that the plaintiff suffered a Loss, unless the auditor can prove that the audit was performed without negligence and the plaintiff was aware of the misstatement.

Question 2

Liability under the 1934 Act

Answer 2

The ability of a plaintiff, with or without privity, to recover against an auditor under the Federal Securities Exchange Act of 1934 if the plaintiff can prove that the financial statements were Materially misstated, which the auditor was actually or constructively aware of, and that the plaintiff relied upon the Info (i.e., financial statements) and suffered a Loss.

Question 3

Racketeer Influenced & Corrupt Organizations (RICO) Act

Answer 3

An act passed by Congress with the intent of punishing those engaged in racketeering by extending criminal liability to those ordering the commitment of racketeering or assisting in those involved in racketeering. Racketeering is an illegal activity carried out on behalf of an organization, such as the use of organized crime to commit illegal acts like extortion or the use of a legitimate business to perform illegal acts like money laundering.