Partner Samuel H. Rudman Talks with Reuters About Ongoing Shareholder Case Against AmTrust and Auditor BDO – and Why Audits Matter to Investors

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February 29, 2024

“Audits matter,” our partner Samuel H. Rudman told Reuters in an article exploring the importance of audit certifications and their importance to investors.

Reuters sat down with Robbins Geller Rudman & Dowd LLP to discuss our ongoing shareholder case against AmTrust Financial Services, Inc. and its independent auditor, BDO USA, LLP. The case presents a key issue, according to Reuters – whether audits matter to investors.

By law, U.S. public companies are required to have their financial statements audited. But, as Rudman shared with Reuters, even in cases involving serious accounting errors and misleading financial reporting, “far too many auditors have escaped liability for their actions due to an ever-tightening legal environment.”

The U.S. Securities and Exchange Commission (“SEC”) has weighed in on the AmTrust case, urging a federal appeals court to uphold the responsibility of auditors for certifying the financials of publicly traded companies.

Going Deeper

The AmTrust case involves allegations that the company misled investors by violating accounting rules for financial reporting. Ultimately, these errors required AmTrust to restate five years of its financial results, and the SEC sanctioned three accountants from BDO for their improper conduct in connection with auditing AmTrust’s financials.

In the shareholder litigation, the Second Circuit reversed the district court’s dismissal of Securities Act claims against AmTrust, but upheld the court’s dismissal of Exchange Act claims against BDO. The Firm has petitioned the Second Circuit to reconsider its ruling with regard to BDO and to reconsider whether a “reasonable investor” would care about BDO’s alleged failure to conduct the audit in good faith.

Reuters noted that the SEC recently weighed in, urging the court to revisit its earlier ruling to ensure accountability for “auditors who abuse their gatekeeper role by propounding false audit certifications.”

Read more about the case and the Reuters article (login required): https://www.reuters.com/legal/transactional/column-audits-matter-amtrust-shareholders-get-us-sec-backing-bid-appellate-redo-2024-02-20/

About Robbins Geller

Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex litigation firms, representing plaintiffs in securities fraud, shareholder derivative, antitrust, corporate takeover, and consumer fraud and privacy cases. With 200 lawyers in 10 offices, Robbins Geller is one of the world’s largest plaintiffs’ firms, and the Firm’s attorneys have obtained many of the largest securities, antitrust, and consumer class action recoveries in history.

The Firm is ranked #1 on the most recent ISS Securities Class Action Services Top 50 Report for recovering more than $1.75 billion for investors in 2022 – the third year in a row Robbins Geller tops the list. And in those three years alone, Robbins Geller recovered nearly $5.3 billion for investors, more than double the amount recovered by any other plaintiffs’ firm. The Firm secured the largest-ever securities fraud class action settlement – $7.2 billion – in In re Enron Corp. Securities Litigation.

For more information, please email us at media@rgrdlaw.com or call us at (619) 338-3821.

New England Carpenters Guaranteed Annuity & Pension Funds v. DeCarlo, No. 20-1643 (2d Cir.).


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