Court dismisses securities claim.A U.S. district court in Illinois dismissed a suit charging an accounting firm with negligence and violations of federal securities law and the Racketeer-Influenced and Corrupt Organizations Act. The case was brought by investors in a real estate development created by Pavilion Development Corp. Pavilion issued securities to investors for the purported purpose of raising capital for a residential development called "Honeytree." The investors alleged they were induced to invest in the securities by false and misleading statements and omissions of facts by Pavilion and its officers. They further claimed their securities were worthless. The accountants, Berry, McEnerney and Cukierski (BMC (BMC Software, Inc., Houston, TX, www.bmc.com) A leading supplier of software that supports and improves the availability, performance, and recovery of applications in complex computing environments. ), performed various accounting services for the partnership. The investors claimed BMC aided and abetted Pavilion's alleged securities fraud and were negligent in providing services to Pavilion. The court dismissed the securities law claims, noting the investors' pleadings were nothing more than bare allegations BMC had been reckless in not knowing that the information Pavilion reported was false and misleading and in not knowing that the offering materials to which BMC contributed were intended for soliciting investors. These allegations were insufficient to turn a possible negligence claim into an action for securities fraud, the court concluded. The court also dismissed the investors' negligence action, noting the Illinois Public Accounting Act provides that "no person, partnership or corporation licensed to practice public accountancy under the Act shall be liable for civil damages to be sons not in privity of contract PRIVITY OF CONTRACT. The relation which subsists between two contracting parties. Hamm. on Part. 182. 2. From the nature of the covenant entered into by him, a lessee has both privity of contract and of estate; and though by an assignment of his lease he may ." In light of the statute and its legislative history, BMC could not be liable to third-party investors for negligent misrepresentation misrepresentation In law, any false or misleading expression of fact, usually with the intent to deceive or defraud. It most commonly occurs in insurance and real-estate contracts. False advertising may also constitute misrepresentation. . (Robin et al. v. Falbo, U.S District Court for the Northern District of Illinois Eastern Division, no. 91 C 2894) Editor's note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : Thanks to Randy Sue Schreiber of Querrey & Harrow Harrow, borough, Greater London, England Harrow, outer borough (1991 pop. 194,300) of Greater London, SE England. For centuries Harrow grew foodstuffs for London. It is mainly residential and contains parts of the Green Belt, areas set aside as parkland. for contributing the Robin v. Falbo case, which she successfully defended. Edited by Wayne Baliga, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , JD, CPCU CPCU Chartered Property Casualty Underwriter CPCU Cardiac Progressive Care Unit CPCU Custody Pending Completion of Use ,vice-president of AON Corp. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion