Which of the following lawsuits resulted in a decision that shareholders could not sue the auditors for the loss in the value of their shares?
A)Haig v.Bamford et al.(1976)
B)Hercules Management Ltd.v.Ernst & Young (1997)
C)Ultramers Corporation v.Touche (1931)
D)United States v.Anderson (2002)

Question

Quizplus · Accepted Answer

The Hercules Management Ltd. v. Ernst & Young (1997) lawsuit resulted in a decision that shareholders could not sue auditors for the loss in the value of their shares. This case established the principle of “privity of contract,” which limits the liability of auditors to the parties with whom they have a direct contractual relationship, such as the company that hires them. In contrast, Haig v. Bamford et al. (1976) was a case involving a breach of fiduciary duty by corporate officers, Ultramers Corporation v. Touche (1931) was a case involving fraud by auditors, and United States v. Anderson (2002) was a criminal case involving accounting fraud.

Which of the Following Lawsuits Resulted in a Decision That