Accounting Firm Advisory and Defense

LEADERS

Overview

Gibson Dunn’s deep bench of lawyers brings many decades of experience representing auditors in complex accounting investigations and litigation.  Our track record runs the gamut of all types of matters, from dealing with the regulatory and civil litigation aftermath of restatements of financial results (including fraud by the audited companies themselves) to all types of professional services litigation that accounting firms face.  We have extensive experience practicing before the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the U.S. Department of Justice, and other regulators on behalf of accounting firms and their employees.  Our team includes one of the most senior former members of the PCAOB Division of Enforcement and Investigations currently in private practice, as well as former Assistant U.S. Attorneys and chairs of ABA and other bar association committees focused on accounting issues.  Our experience allows us to provide exceptional compliance advice and other counseling to firms under SEC and PCAOB jurisdiction, and to defend firms and individuals in a wide range of enforcement investigations and disciplinary proceedings.

Additionally, our lawyers regularly represent accounting firms and professionals in private actions such as shareholder litigation, and in other business disputes such as employment and contract matters.  We have time and again obtained successful resolutions for our clients in these civil lawsuits.

In the area of audit regulation, investigations, and defense in particular, we have intimate knowledge of PCAOB and SEC rules and standards governing the audit profession, broad experience counseling clients through a wide variety of regulatory hurdles, and an unmatched trial and appellate team that has handled complex litigation across the spectrum.  Our experience in this field includes cross-border regulatory and litigation matters, matters involving Section 10A investigations, matters involving audit committees, criminal investigations and prosecutions, challenges to administrative rules and regulations, and private securities litigation.  We have handled all types of matters for the “Big Four” accounting firms (representing both U.S. and non-U.S. member firms and their personnel), including experience litigating “one firm” issues.  Our lawyers also have experience in advising both firms and regulatory authorities in connection with sectoral and financial sector regulatory rules and standards in Europe.

EXPERIENCE & RECENT REPRESENTATIONS

Counseling and Defense of Audit and Assurance Practices

  • Regulatory counseling concerning the Sarbanes-Oxley and Dodd-Frank Acts and SEC and PCAOB rules and standards
  • Internal reviews and regulatory defense in connection with SEC, PCAOB, and other public-sector investigations
  • Representation of accounting firms and professionals – as defendants or third parties – in securities class actions, professional malpractice cases, and other civil litigation
  • Trial and appellate advocacy in administrative hearings and state and federal courts

Advice and Advocacy for Multidisciplinary Professional Services Organizations

  • Counseling, risk assessment, and compliance program implementation in key compliance areas, including criminal law, antitrust and competition, money laundering, sanctions, tax evasion, false claims, corruption, and financial-sector regulation
  • Representation of accounting firms – as potential defendants, named defendants, or third parties – in actions brought by litigation trustees appointed by bankruptcy courts
  • Advocacy before a wide array of U.S. and international regulators and prosecutors, including the DOJ, the SEC, the PCAOB, the Commodity Futures Trading Commission, the Office of Foreign Assets Control, the New York Department of Financial Services, state attorneys general, and the U.K. Financial Reporting Council
  • Representation in government contracting disputes with the U.S. Department of Defense and other federal agencies, as well as state and local governments

Litigation Services for Sophisticated Businesses

  • Employment and labor counseling and litigation, including in wage-and-hour and worker-classification disputes
  • Representation in private contracting and business litigation
  • Appellate advocacy in all areas of law, up to and including the U.S. Supreme Court

Audit Regulation and Investigations

  • Regularly counsel large U.S. and non-U.S. audit firms regarding SEC and PCAOB compliance matters.
  • Regularly represent U.S. and non-U.S. audit firms in SEC and PCAOB enforcement investigations.
  • Counsel global networks regarding regulatory and cross-firm matters.
  • Provide advice to firms seeking to register with the PCAOB.

Private Securities Litigation

  • Secured dismissal of a securities class action complaint filed against a large accounting firm asserting claims under Section 10(b) of the Securities Exchange Act. Plaintiffs alleged that the firm’s audit of its client was deficient because it failed to recognize “red flags” indicating problems the company was experiencing during the height of the Great Recession – and that the firm’s unqualified audit opinions amounted to false statements. The appellate court unanimously rejected plaintiffs’ arguments, and also affirmed the district court’s denial of leave to amend the complaint.
  • Won dismissal for a large accounting firm in a putative class action arising out of alleged accounting fraud by a client. The Second Circuit affirmed the dismissal of plaintiffs’ claims under Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and under Section 11 of the Securities Act of 1933 for failure to plead loss causation.
  • Secured Fourth Circuit reversal of the district court’s partial denial of a large accounting firm’s request to compel arbitration of an employee’s Title VII claims. The case asserted claims under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. §1981.  The firm had sought to compel arbitration and stay or dismiss the proceedings. The appellate court agreed that the arbitration provision at issue could and should be construed to require arbitration of the plaintiff’s Title VII claims, and agreed that the arbitration provision was not procedurally or substantively unconscionable.  Gibson Dunn subsequently won an order from the district court compelling arbitration in the same former employee’s second Title VII case.
  • Successfully opposed class certification in an action filed in the Southern District of New York against a corporation and its auditor, in the wake of a restatement. Plaintiffs alleged a putative class claim against the auditor under Sections 10(b) of the Securities Exchange Act of 1934. The court held that the lead plaintiff could not establish loss causation for its individual claim and therefore denied class certification on the ground that the lead plaintiff had failed to satisfy the typicality and adequacy requirements for class certification.
  • Obtained dismissal of putative class claims asserted against a large accounting firm in a Ponzi scheme. The court dismissed plaintiffs’ claims under the Securities Exchange Act of 1934 for failure to adequately plead scienter.
  • Won dismissal of putative class claims asserted against a non-U.S. firm of a global network in connection with alleged accounting improprieties at an audit client. In addition to being sued in the United States, the firm was investigated by the SEC and DOJ and authorities in its home country. The appellate court affirmed the dismissal of plaintiffs’ claims under the Securities Exchange Act of 1934 for failure to adequately plead scienter.

Professional Services Litigation

  • Successfully forced the City of Los Angeles to voluntarily dismiss with prejudice the last of its fraudulent inducement claims (having previously dismissed its contract claims) in a lawsuit against a firm client in the California Superior Court. The dismissal came in anticipation of the firm’s request for an award of sanctions against the City after Gibson Dunn discovered and exposed a fraud on the court and the firm, which acted as a systems integrator for the City.

RECENT PUBLICATIONS

PCAOB Adopts Final Rule on the Holding Foreign Companies Accountable Act

-September 30, 2021

2021 Mid-Year Securities Enforcement Update

-July 20, 2021

China Constricts Sharing of In-Country Corporate and Personal Data Through New Legislation

-June 17, 2021

Consequences of Wirecard Scandal: New Requirements for Corporate Governance and Audit of German Listed Companies

-June 7, 2021

New York Department of Financial Services Finalizes Confidential Supervisory Information Regulation

-April 21, 2021

2020 Year-End Securities Litigation Update

-February 16, 2021

Considerations for Preparing Your 2020 Form 10-K

-February 3, 2021

2020 Year-End Securities Enforcement Update

-January 19, 2021

2020 Mid-Year Securities Enforcement Update

-July 20, 2020

Additional U.S. Public Company Disclosure Considerations Related to the Impact of COVID-19

-June 25, 2020

Protecting Client Privilege During UK Regulatory Investigations: A Cautionary Tale from the UK’s Audit Regulator

-June 25, 2020

Key Considerations for Issuers and Auditors Regarding Going-Concern Analysis

-May 27, 2020

COVID-19 Update: Financial Reporting and Auditing Considerations for Corporate Management, Audit Committees, and Audit Firms

-April 13, 2020

Perspectives from One Month into the COVID-19 U.S. Outbreak: Public Company Disclosure Considerations

-April 9, 2020

Considerations for Preparing Your 2020 Proxy Statement

-February 4, 2020

2019 Year-End Securities Enforcement Update

-January 14, 2020

SEC Releases Statement on Key Reminders for Audit Committees

-January 6, 2020

2019 Mid-Year Securities Enforcement Update

-July 18, 2019

2018 Year-End Securities Enforcement Update

-January 15, 2019

2018 Mid-Year Securities Enforcement Update

-July 30, 2018

D.C. Circuit Holds That Witnesses in PCAOB Investigations Have the Right to a Technical Expert

-March 26, 2018

2017 Year-End Securities Enforcement Update

-January 10, 2018

SEC Staff Provides Important Guidance for Disclosure and Accounting Implications of the Tax Cuts and Jobs Act – Practical Considerations for Reporting Companies

-December 26, 2017

SEC Proposes Amendments to Securities Regulations to Modernize and Simplify Disclosure

-October 13, 2017

2017 Mid-Year Securities Enforcement Update

-July 18, 2017

PCAOB Adopts New Model for Audit Reports

-June 2, 2017

2016 Year-End Securities Enforcement Update

-January 13, 2017

2016 Mid-Year Securities Enforcement Update

-July 13, 2016

SEC Updates Guidance on Non-GAAP Financial Measures

-May 19, 2016

PCAOB Again Issues Proposal to Change Audit Report

-May 18, 2016

2015 Year-End Securities Enforcement Update

-January 11, 2016

SEC Issues Concept Release Seeking Input on Enhanced Disclosures for Audit Committees

-July 7, 2015