included only $20 million in compensatory damages; the balance of $330 million in punitives was assessed against the client's former chairman, and one of its investment banks).
(n26) 461 A.2d 138 (N.J. 1983).
(n27) The role of accounting firms in the S&L crisis has received considerable attention in the press. See, e.g., Accountants Under Siege, A.B.A. J., Jan. 1991, at 20; Arbitration in FDIC Against Accountants Yields Small Recovery, WALL ST. J., Mar. 8, 1991, at B8; Eric N. Berg, The Lapses by Lincoln's Auditors, N.Y. TIMES, Dec. 28, 1989, at D1; Lee Berton, Spotlight on Arthur Young Is Likely to Intensify as Lincoln Hearings Resume, WALL ST. J., NOV. 21, 1989, at A20; Lee Berton, Friendly Watchdog, An S&L in California Dumped Peat Marwick for Congenial Auditor, WALL ST. J., May 10, 1989, at A1; Lee Berton, Big Accounting Firms Face Ban in S&L Bailouts, WALL ST. J., Mar 14, 1990, at A3; Weston Kosova, Cranston Wiggling, THE NEW REPUBLIC, Mar. 13, 1990, at 25; Sherry P. Sontag, Soured Deals Snag More Professionals, NAT'L L.J., Feb. 4, 1991, at 1; Paulette Thomas & Stephen J. Sansweet, Ernst & Young Agrees to Pact on S&L Work, WALL ST. J., Feb. 7, 1991, at B5; Marc Tucker & Jay Eisenhofer, Negligent Representation Suits Multiply in Wake of S&L Crisis, NAT'L L.J., Jun. 25, 1990 at 17; Steven Waldman, The Other S&L Culprits, NEWSWEEK, Oct. 29, 1990; at 54; Leslie Wayne, Where Were the Accountants?, N.Y. TIMES, Mar 12, 1989, at F1; Stephen Wermiel, High Court Refuses to Hear Challenge of Regulators' Thrift Cleanup Tactic, WALL ST. J., Mar. 26, 1991, at B10.
(n28) Auditors attest to the material accuracy of financial information supplied by their clients. When the information is materially misstated (which would include material omissions) in the audited financial statements, the fault can lie with the corporate client; corporate officers and directors) corporate employees; the client partnership or sole proprietor (if it is not a corporation); independent contractor professionals such as appraisers, attorneys and the like; and, of course, the outside auditor. All or some of these parties might have acted with scienter, or negligently, or non-negligently. This article confines itself primarily to the case where the auditor is negligent, where the third party is non-negligent, and one or more of the other entities listed has also acted negligently and/or fraudulently.
(n29) See infra notes 287-331 and accompanying text. See also infra text accompanying note 371.
(n30) See GARY J. PREVITS & BARBARA D. MERINO, A HISTORY OF ACCOUNTING IN AMERICA 129 (1979).
(n31) Id. at 130.
(n32) In 1900 Henry Clews, President of the New York Stock Exchange, noted that, "while financiers were interested in production, they were at least as interested in profits from issuing securities and arranging mergers and acquisitions." Id. at 129 (quoting HENRY CLEWS, THE WALL STREET POINT OF VIEW (1900)). As a result, Clews was, as early as 1890, "an avid proponent of publicity of corporate accounts." Id. at 130.