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ALI-CLE Accountants’ Liability: Litigation and Issues in the Wake of the Financial Crisis
Causation can be one of the most pivotal and hotly contested issues in an accountants’ liability case; it also can be one of the least understood. While certain fundamental aspects of causation enjoy consensus arising from a well-developed body of case law, courts express differences of opinion regarding a number of causation issues, and the analysis can be highly fact-specific. Rather than attempt to address all contexts in which causation can arise in litigation against an accounting firm, this paper focuses on the fundamentals of the law of causation in common law professional negligence claims and in federal securities fraud class actions brought under Section 10(b) and Rule 10b-5; discusses how causation has been analyzed in the context of such claims against accounting firms; and identifies a number of areas in which the law of causation is currently in flux.