BusinessCompany NewsUS-quoted UK companies may face legal onslaught

US-quoted UK companies may face legal onslaught

UK companies bracing themselves for ruling in landmark case which could see them in court on a guilty-by-association basis

The result of a US Supreme Court trial could see British companies dragged
through the courts for having business links with companies that submit false
accounts. This suggests that UK corporates quoted on the New York stock
exchange, will be at much greater risk of litigation, because of their focus on
US operations.

The situation rests on the outcome of the case involving Scientific-Atlanta,
an electronics supplier being sued by Stonebridge Investments for its links with
Charter Communications, a cable TV provider, between 1999 and 2002.

In
court
papers
the investors claimed that Scientific-Atlanta was involved in ‘sham
transactions’ designed to inflate the Arthur Andersen-audited company’s
cashflow by $17m (£8.5m).

Under current law, any company that issues shares in the US is liable for big
class-action compensation pay-outs if they file false accounts or mislead their
shareholders.

On the back of the current case, the US Supreme Court is now considering
whether any other third-party supplier, legal firm, accountant or bank that
works with the offending company should face claims from defrauded investors and
shareholders.

Related Articles

BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

3m Emma Smith, Managing Editor
CVR Global appoints partner in London office

Company News CVR Global appoints partner in London office

7m Alia Shoaib, Reporter
FTSE100 failing to provide adequate ethics information

Company News FTSE100 failing to provide adequate ethics information

7m Alia Shoaib, Reporter
Moore Stephens recruits new private client partner

Accounting Firms Moore Stephens recruits new private client partner

10m Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

10m Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

10m Emma Smith, Managing Editor
Brand strength leads to fee income growth for RSM

Accounting Firms Brand strength leads to fee income growth for RSM

10m Emma Smith, Managing Editor
Mazars strengthens audit team with partner appointment

Accounting Firms Mazars strengthens audit team with partner appointment

10m Emma Smith, Managing Editor