VSCPA Opposes Aiding  and Abetting Amendment to Restoring American Financial Stability Act

Please note that this letter was also sent to Sen. Jim Webb. 

April 9, 2010  

Honorable Mark Warner                                     
United States Senate                                                                
Washington, D.C. 20510                                                

Dear Senator Warner:

On behalf of the 9,000 members of the Virginia Society of CPAs (VSCPA), we oppose any amendment to the Restoring American Financial Stability Act of 2010 that would permit a private right of action for aiding and abetting violations under the Securities and Exchange Act of 1934. Your past leadership on this issue is commendable. On November 24, 2009, you penned a letter to Sen. Dodd voicing concerns about the inclusion of a private right of action in his draft bill, and we applaud your courageous stand and leadership on this issue.

 

As you know, if an amendment is offered to expand liability through a private right of action, plaintiff attorneys could include in securities class action cases parties that had only a marginal relationship to a fraudulent actor. If enacted, all sorts of businesses, large and small, would face an entirely new set of legal claims, especially in the accounting profession. Because securities class actions tend to seek massive damage awards, many companies, even those bearing no culpability whatsoever, will feel compelled to settle a case as opposed to going to trial so as not to run the risk of losing a “bet the company” verdict.

 

As you stated in your letter, “For Virginia lawyers, auditors, accountants and many others in the private sector who provide services to or work with publicly-traded companies, this has potentially crippling liability effects.”  We absolutely agree. With unemployment in Virginia hovering around seven percent, this would be the wrong time to increase liability as it will drain valuable resources from our economic growth and job creation. 

 

We strongly support the current authority of the SEC to pursue aiding and abetting cases because of its experience and focus on protecting the capital markets from fraudulent conduct. Unfortunately, history shows that granting parallel authority to plaintiff attorneys will simply result in increased litigation based on the perverse hopes of extracting large settlements fromdeep-pocketed defendants.

 

Thank you for your leadership on this issue, and we hope you will continue your opposition to such an economically dangerous amendment.If we can be of any service to you, please contact me or VSCPA Government Affairs Director Emily Walker at ewalker@vscpa.com or (804) 612-9428.

 

Sincerely,

 

James K. Walker, CPA

Chair, VSCPA Board of Directors

 

cc: American Institute of CPAs (AICPA)

LAST UPDATED 5/12/2010

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