The liability of accountants and auditors under the Federal Securities Acts and the Racketeer Influenced and Corrupt Organizations Act in the USA

Shows how the Securities and Exchange Act and the Racketeer Influenced and Corrupt Organizations Act 1970 (RICO) in the USA impose additional burdens on auditors in the detection of accounting errors, irregularities and fraud, compared with other countries like the UK; this is in addition to the generally high levels of US litigation against professional people because of factors like contingency based legal fees, class actions, and jury trials. Outlines the history of protection of investors by law since the stock market crash of 1929, the Acts’ provisions, and cases arising from them: the Securities Act is concerned with disclosure, and the Exchange Act with trading in securities. Moves on to the provisions of the RICO, which makes accountants criminally liable for mail and securities fraud and for knowingly issuing negligent audit reports, arguing that the original intentions of the Act have widened so far that accountants have become insurers of business failures at triple the losses suffered by the businesses.