Barlow Lyde & Gilbert issued this October 7 paper on the “illegality” and “in pari delicto” defenses that auditors and bankers are using to defend themselves against suits by corporate entities that lost monies because of frauds that included the involvement of some personnel of the corporate entities. The paper briefly covers the recent opinion by Judge Kaplan in some of the Parmalat cases and a recent decision from the UK House of Lords.
The outcomes are rather stunning because the result is that an auditor’s involvement in massive fraud does not produce an adverse financial outcome for the auditor.