Charlie Company is headquartered in Wisconsin.Its auditors are headquartered in Minnesota.K.Bob lives in Bloomington,Indiana,but works in Chicago,Illinois.Based on a tip from his boss,Bob called his stockbroker (B.Jim whose office is in Chicago)and instructs him to purchase 1,000 shares of Charlie Company despite never having requested or reviewed Charlie Company's financial statements.Charlie is traded on the New York Stock Exchange,and the transaction took place 15 minutes later on the floor of the exchange.
Charlie Company declared bankruptcy three months later,and Bob lost the entire investment.Bob sued Charlie Company's auditors for ordinary negligence.
The trial is scheduled for hearing in Madison,Wisconsin.Before the opening of the trial,the attorney for the auditors objects to the trial being held in Wisconsin because the transaction between Bob and Jim took place in Illinois.The attorney asks that the trial be moved to Illinois.
Required:
A. Third parties have different standing to sue in different jurisdictions. In Wisconsin, Bob may be able to bring suit against auditors for ordinary negligence as a foreseeable party, but in Illinois, Bob may have to prove he is a foreseen party or allege gross negligence or fraud on the part of auditors in order to have a right to bring suit.
A. Why would the attorney ask for the trial to be moved?
B. The best defense is a lack of causation between the materially misstated financial statements and Bob's loss. Bob never evaluated the financial statements but purchased the stock through a tip from his boss. Auditors may also claim that they performed the audit with due care and according to generally accepted auditing standards.
B. What defense would you raise if you were the auditors' attorney?

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The Answer of Charlie Company is headquartered in Wisconsin.Its auditors are headquartered in Minnesota.K.Bob lives in Bloomington,Indiana,but works in Chicago,Illinois.Based on a tip from his boss,Bob called his stockbroker (B.Jim whose office is in Chicago)and instructs him to purchase 1,000 shares of Charlie Company despite never having requested or reviewed Charlie Company's financial statements.Charlie is traded on the New York Stock Exchange,and the transaction took place 15 minutes later on the floor of the exchange.
Charlie Company declared bankruptcy three months later,and Bob lost the entire investment.Bob sued Charlie Company's auditors for ordinary negligence.
The trial is scheduled for hearing in Madison,Wisconsin.Before the opening of the trial,the attorney for the auditors objects to the trial being held in Wisconsin because the transaction between Bob and Jim took place in Illinois.The attorney asks that the trial be moved to Illinois.
Required:
A. Third parties have different standing to sue in different jurisdictions. In Wisconsin, Bob may be able to bring suit against auditors for ordinary negligence as a foreseeable party, but in Illinois, Bob may have to prove he is a foreseen party or allege gross negligence or fraud on the part of auditors in order to have a right to bring suit.
A. Why would the attorney ask for the trial to be moved?
B. The best defense is a lack of causation between the materially misstated financial statements and Bob's loss. Bob never evaluated the financial statements but purchased the stock through a tip from his boss. Auditors may also claim that they performed the audit with due care and according to generally accepted auditing standards.
B. What defense would you raise if you were the auditors' attorney?

Charlie Company Is Headquartered in Wisconsin