Drinker Biddle has assembled an accomplished team of trial attorneys with an impressive track record of success throughout their professional careers in accounting-based representations. These successes, achieved at the firm and elsewhere, include: 

Accountants’ and Auditors’ Defense

  • In re IKON Office Solutions, Inc. Sec. Litig. (E.D. Pa. and 3rd Cir.): Achieved highly precedential summary judgment ruling on loss causation and scienter grounds and appellate court affirmation for Ernst & Young in consolidated fraud-on-the-market class actions under section 10(b) of the Exchange Act and section 11 of the Securities Act resulting from the audit client’s $110 million charge to restated earnings. 
  • In re Parmalat Sec. Litig. (S.D.N.Y.): Represented Deloitte & Touche in a case involving massive fraud at an Italian company, most of whose securities were traded on European securities exchanges. A successful strategy to exclude foreign investors from the U.S. class action for lack of subject matter jurisdiction reduced the accounting firm’s potential exposure by billions of dollars. 
  • In re Bally Total Fitness Sec. Litig. (N.D. Ill.): Obtained dismissal of a securities fraud class action challenging Ernst & Young’s audits of the nation’s largest health club operator, which restated several years of financial statements following an audit committee investigation that revealed a “culture” that purportedly encouraged “aggressive accounting,” including the failure to record adequate reserves for membership cancellations and attrition. 
  • In re Cendant Corp. Sec. Litig. (D.N.J.): Secured a favorable settlement resolution for Ernst & Young in a $500 million accounting fraud that became one of the largest and most complex securities fraud litigations in U.S. history. This defense included deposing outside directors, preparing key motions, successfully appealing to the Third Circuit, acting as lead lawyer for several opt-out and related cases, and developing the damages defense with a leading economic consulting firm. 
  • Securities and Exchange Commission v. Buettner, et al. (E.D. Pa.): Achieved exceptional settlement concessions for PricewaterhouseCoopers audit engagement partner in an action under section 10(b) of the Exchange Act involving purchase price adjustments, bad debt reserves, and intercompany transfers, after moving to disqualify the Securities and Exchange Commission’s (SEC) accounting expert for generally accepted accounting principles (GAAP) deficiencies in his opinion. 
  • In re Bank of Trade and Commerce of the Cayman Islands (N.D. Ill.): Prevailed on summary judgment for Arthur Andersen in a case brought by the bank’s depositors stemming from the embezzlement of more than $800 million from a Cayman Islands bank. 
  • AUSA Life Ins. Co. v. Ernst & Young LLP (S.D.N.Y. and 2nd Cir.): Secured defense verdict and appellate court affirmation on loss causation grounds for Ernst & Young in a lengthy bench trial involving audit negligence and fraud claims brought by institutional investors who purchased the debt instruments of a utility that became insolvent following an aggressive campaign of corporate acquisitions. 
  • Order of Formal Investigation No. 105-OFI-2006-003 (PCAOB): Represented an office managing partner of a major national accounting firm who served as the concurring partner on a purportedly deficient audit of a publicly-traded software company, in an investigation alleging workpaper violations under both Public Company Accounting Oversight Board (PCAOB) standards and generally accepted auditing standards (GAAS). No charges or claims were brought against the client. 
  • In re Acceptance Insurance Companies, Inc. Sec. Litig. (D. Neb.): Obtained dismissal in lawsuit pursued under section 10(b) of the Exchange Act and section 11 of the Securities Act by a publicly-traded insurer against Deloitte & Touche relating to allegedly understated loss reserves. 
  • 27001 Partnership v. BT Sec. Corp. (N.J.): Attained trial court dismissal and appellate court affirmation for Arthur Andersen in a securities fraud suit brought by institutional investors in Bruno’s, Inc., the largest supermarket chain in the southeastern United States, which entered bankruptcy following a leveraged recapitalization. 
  • In re PNC Financial Services Group, Inc. Sec. Litig. (W.D. Pa.): Secured a highly favorable settlement for Ernst & Young in twelve consolidated securities fraud class actions and an SEC investigation arising from PNC’s restatement of unaudited year-end and interim financial information to consolidate certain special purpose entities. No charges or claims were brought against the accounting firm or its auditors in a parallel Department of Justice (DOJ) action. 
  • In re Hamilton Bancorp, Inc. Sec. Litig.: Represented Deloitte & Touche in litigation and administrative proceedings involving the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) related to loss reserve issues during Deloitte’s audits of a Miami-based bank. The case resolved on favorable terms without any regulatory action against the accounting firm or any of its personnel. 
  • In re Van Wagoner Funds, Inc. Sec. Litig.: Obtained dismissal of all claims, including claims under section 11 of the Securities Act, in a consolidated multi-district litigation contesting Ernst & Young’s resolution of numerous audit issues, including the valuation of illiquid securities, for a family of mutual funds. 
  • Insurance Commissioner v. Arthur Andersen LLP (Conn. Super. Ct.): Defended Arthur Andersen in an action arising from the insolvency of a Connecticut health insurance company. The case settled favorably in mediation following completion of discovery. 
  • TCG Holder Representative, Inc. v. Grant Thornton LLP (Ill. Cir. Ct.): Obtained dismissal with prejudice and without leave to amend on all claims against Grant Thornton in a post-purchase price dispute between the selling shareholders of an audit client and the acquirer in a corporate merger. 
  • NCP Litigation Trust v. KPMG (N.J. Super. Ct.): Secured a favorable settlement for KPMG in an audit malpractice suit alleging a KPMG audit had failed to uncover fraudulent revenue recognition issues involving false journal entries and phony checks. 
  • Fidel v. Ernst & Young LLP (W.D. Ky. and 6th Cir.): Attained trial court dismissal and appellate court affirmation for Ernst & Young in response to a securities class action complaint alleging inadequate inventory loss reserves on the financial statements of apparel manufacturer Fruit of the Loom, which filed for bankruptcy after a failed operational restructuring. 
  • Household International Sec. Litig. (N.D. Ill.): Secured a favorable settlement for Arthur Andersen in an action involving its audit of a large sub-prime mortgage lender whose financial statements were restated following the company’s settlement of suits brought by the attorneys general of numerous states alleging abusive lending practices. 
  • In re Tax Shelter Investigations (S.D.N.Y.): Represented several partners and principals of KPMG and Ernst & Young, respectively, in the DOJ investigations of certain tax-advantaged investment strategies implemented during the period 1999-2002. None of our clients have been charged.

Litigation Involving Accounting Irregularities 

  • In re Enron Sec. Litig. (S. D. Tex.): Represented numerous partners, counsel, and associates of an international law firm in parallel criminal and civil securities litigation arising from the financial collapse of Enron Corporation. None of our clients were charged or found civilly liable. 
  • Hollinger International, Inc. (N.D. Ill.): Representing former Illinois Governor James R. Thompson, who served as Chairman of the Audit Committee of Hollinger International, Inc., in a number of related matters, including a class action securities suit, a DOJ investigation, an SEC investigation, and other litigation arising from allegations of unauthorized payments to former Chairman Conrad Black and others. The DOJ and SEC brought no criminal or civil claims against the client, who has also been dismissed from the class action. 
  • In re DVI, Inc. Sec. Litig. (E.D. Pa.): Defended a former director of a publicly-traded international health care financing company in a shareholder and bondholder class action alleging securities fraud under sections 10(b) and 20(a) of the Exchange Act based upon numerous accounting irregularities, as well as related investigations brought by the DOJ and SEC. No charges or claims were brought against the director in either governmental proceeding, with the class action still ongoing. 
  • In re GMH Communities Trust Sec. Litig. (E.D. Pa.): Achieved a highly favorable settlement for the former chief financial officer of a publicly-traded real estate investment trust in a shareholder class action alleging securities fraud and related claims under sections 10(b) and 20(a) of the Exchange Act and sections 11 and 15 under the Securities Act in connection with the capitalization of various business-related costs, as well as a Sarbanes-Oxley whistleblower complaint against his former employer. 
  • Wolfson v. Meritor Savings Bank (E.D. Pa.): Awarded complete defense verdict for savings bank after two-week jury trial in a fraud-on-the-market securities class action relating to goodwill write-downs and the sufficiency of loss reserves. 
  • In re First Fidelity Bancorporation Sec. Litig. (D.N.J.): Secured a favorable settlement for the issuer in 21 consolidated securities class actions and derivative suits focusing on the alleged insufficiency of the bank’s loan loss reserves. No charges or claims were brought against the client in a related SEC investigation. 
  • Lewis v. Straka (E.D. Wis.): Represented the former audit committee chairman of CIB Marine Bancshares, Inc. in this putative section 10(b) class action that included allegations of understated loan loss reserves. The matter resolved without any payment by the client.