BOSTON – Edward D. Shoulkin is quoted in a recent issue of Massachusetts Lawyers Weekly regarding Sgarzi, et al. v. Sharkansky & Company LLP, et al., an accounting liability case in which a Massachusetts Court decided that an auditor can be held liable under Chapter 93A in the absence of a direct commercial relationship with the plaintiffs if evidence showed that their actions “interfered with ‘trade or commerce’ in some other way.”
In the case, the plaintiffs, investors in a car-loan company, claimed that the accounting firm that audited the company’s financial statements aided the company in concealing its actual financial state. The Court denied the auditor’s motion for summary judgment with respect to the plaintiffs’ fraud-based claims and for alleged violations of Chapter 93A, the Massachusetts Consumer Protection Act. The article, “Auditor can be liable under 93A to non-client investors: Plaintiffs say they ‘reasonably relied’ on misleading financials,” appears on the front page of the July 13, 2016 issue.
Shoulkin is quoted in the article concerning the often misunderstood scope of financial statement audits: “The reality is that an audit doesn’t guarantee the solvency or profitability of a business. It doesn’t verify the accuracy of every item on a company’s financial statement and really can’t test every transaction of a company or test every asset or liability. So these sorts of claims by non-clients can be troubling because of the unlimited expanse of potential claimants.”
Shoulkin noted the concern over the potential impact of this and other decisions on the accounting profession, stating that, “There’s an unknown class of plaintiffs out there to whom these [audit] reports may ultimately be provided, and those third parties are going to claim reliance on those reports in deciding to invest in a company or provide a company with loans. The combination of potential Chapter 93A liability — and the attorneys’ fees, costs and multiple damages it brings — with an unknown number of potential plaintiffs “may be adding fuel to the fire.”
Shoulkin is a skilled trial and appellate attorney with 25 years of experience in a broad range of litigation matters, particularly in defending professionals in civil disputes and disciplinary proceedings, including accountants, real estate brokers, health care providers, insurance agents, attorneys, property managers, home inspectors, and other professionals. He also represents multinational corporations, small businesses and individuals in business disputes, construction litigation, product liability cases, premises liability actions, liquor liability claims, environmental litigation, and insurance coverage matters.
About Barton Gilman
Barton Gilman is one of New England’s leading civil litigation law firms with offices in Boston and Providence. Its experienced trial attorneys appear regularly in the federal and state courts of Massachusetts, Rhode Island and Connecticut. Providence Business News has named the firm a 2016 Rhode Island Best Places to Work, marking the eighth time it has received the recognition in the past decade.