Learning Check 4-15

Learning Check 4-15 - for innocent parties in the claim to...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Learning Check 4-15 Identify five other ways in which the Private Securities Reform Act of 1995 will potentially change auditors’ legal liability. Explain how each is of potential benefit to the auditor. Following is a list of ways that the Private Securities Reform Act of 1995 (Reform Act) will potentially change auditor’s legal liability: 1. The Reform Act places a limit on damages that could reduce the maximum dollar amount that an auditor can be held responsible for. 2. The Reform Act requires that the plaintiff is responsible for paying a reasonable amount of the defendant’s legal fees that is directly related to the litigation found by the counts to be unwarranted. 3. The Reform Act provides for a stay of discovery during the period where a motion to dismiss a case is pending. This reduces the cost that often times makes it easier
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: for innocent parties in the claim to settle unwarranted lawsuits. 4. The Reform Act limits the amount of punitive damages that can be claimed by eliminating securities fraud as a basis for bringing action under the Racketeer Influenced and Corrupt Organization Act. The limit on punitive damages will reduce the cost of damages to auditors. 5. The Reform act puts limits on third party rights to sue by limiting the number of times that a plaintiff can be the lead person. The plaintiff can be the lead no more that in five class action lawsuits in any three year period. 6. The Reform Act changed the way that the courts appoint lead plaintiffs, and changed the limits on the number of people that may sue auditors....
View Full Document

Ask a homework question - tutors are online