Accounting Firm Advisory and Defense

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.