SEC Pursues Small Company Over Lax Internal Controls

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Compliance Week By Tammy Whitehouse The Securities and Exchange Commission is sending another warning about fraud prevention by pursuing top executives at a small company for failing to stop a massive fraud, although legal experts are divided on whether it sends the right message. Koss Corp., which produces consumer electronics, and its president and CEO,…

Suing Auditors for Malpractice (And Winning!)

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Winning a case against an auditing firm when there is a sizeable fraud (such as the Koss Corp. embezzlement) or the collapse of a Ponzi scheme (such as the Bernie Madoff case) is not easy. Simply because there is a fraud, a business failure, or a pyramid scheme collapse, the auditors are not necessarily at…

Audit Malpractice Defense: Four Key Issues

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When a major fraud is discovered in a company, one of the key targets of litigation is usually the independent auditors. Two well-publicized cases in which management or shareholders suing the auditors after fraud was uncovered involve Koss Corp. (auditors Grant Thornton) and Navistar International Corp. (Deloitte & Touche). Plaintiffs look to the auditors for…

Auditor Malpractice: How to Sue an Audit Firm and Win

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Last week, Reuters printed an interesting and enlightening interview with Steven Thomas, the managing partner of Thomas, Alexander & Forrester … an attorney known for suing large auditing firms for malpractice… and winning! Recent big wins include $520 million and $130 million judgments against BDP Seidman, on behalf of Espirito Santo and Batchelor Foundation, respectively.…

When Employees Steal, the SEC May Punish the Company and the CEO

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Guest Post by Keith Paul Bishop Editor’s Note: This article was originally published on Keith Bishop’s blog, California Corporate & Securities Law on November 23, 2011. It offers us a different view from that of Tracy Coenen regarding the SEC’s action against Michael Koss and Koss Corp. for the embezzlement perpetrated by Sujata Sachdeva. In…