Federal Issues

    Aiding and Abetting Liability 

    The Private Securities Litigation Reform Act of 1995 empowered the Securities and Exchange Commission to pursue aiding and abetting securities claims against third parties that have a business relationship with a company engaged in fraudulent activity if they had knowledge of the fraud.  The AICPA supports leaving the enforcement for aiding and abetting with the SEC, not outsourcing the enforcement to plaintiff’s lawyers.

    With the unfolding of the financial crisis, there have been a series of attempts in the House and Senate to expand aiding and abetting liability enforcement to plaintiff’s attorneys.  The AICPA supports the SEC’s interest in reducing the standard of aiding and abetting knowledge from its current standard of “knowingly” to one of “recklessly” but opposes any attempts to give private attorneys the right to bring aiding and abetting claims under the securities laws thereby overturning the balance struck in the 1995 reforms.

    Legislative Action

    On July 30, 2009, former Senator Arlen Specter, a Pennsylvania Democrat, introduced S. 1551, which would overturn two U.S. Supreme Court decisions in Stoneridge and Central Bank of Denver that had upheld the SEC’s enforcement authority.  The bill would grant plaintiff’s lawyers license to sue under a widened aiding and abetting theory and expose virtually any third party that works with a publicly held business to accusations of securities fraud.

    During consideration of Financial Regulatory Reform legislation in the House Financial Services Committee, an amendment was drafted but not offered to grant plaintiff's attorneys the ability to pursue aiding and abetting cases.  The final legislation, H.R. 4173 contained language that would reduce the “knowing” standard to “reckless” for the SEC only. 

    On April 15, 2010, former Senator Christopher Dodd, a Connecticut Democrat, introduced  the financial regulatory reform bill entitled the Restoring American Financial Security Act of 2010 (bill number S. 3217).   The original discussion draft that Senator Dodd circulated in November 2009 included language expanding aiding and abetting liability to allow plaintiffs' attorneys for the first time since passage of the Private Securities Litigation Reform Act of 1995 to sue parties that may have aided or abetted a securities violation, but this language was dropped from the Restoring American Financial Security Act of 2010.  On the heels of the circulation of November 2009 discussion draft, Senator Robert Menendez, a New Jersey Democrat, introduced S. 2183 on November 20, 2009 which included a similar widening of aiding and abetting liability sought by plaintiff’s attorneys.

    During the Senate floor debate of S. 3217, an amendment was filed by Senator Specter, which was similar to his original bill S. 1551, to increase aiding and abetting liability.   However, the amendment was never offered and S. 3217 passed the Senate on May 20, 2010. 

    During the House/Senate Conference, Representative Maxine Waters, California Democrat, offered the amendment allowing for plaintiffs’ attorneys to sue for aiding and abetting.  The amendment was agreed to by the House Conferees on a 11-8 vote.

    The Senate conferees rejected the amendment, and the Conference replaced the Waters amendment with a GAO study on the issue to be completed within one year of the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    Copy of Legislation

    A copy of the law is available on the Library of Congress's THOMAS website.  The law, and all major Congressional actions leading to passage, are available by using the advanced search function and searching for H.R. 4173 by bill number under the 111th Congress.  The THOMAS website also includes copies of other bills noted above and all Congressional actions, including S. 3217, H.R. 4173, S.1505 and S. 2183.

    AICPA Letters

    May 12, 2010 Letter from Barry Melancon to the Members of the Senate Advocating for a "No" vote on the Specter Aiding and Abetting Amendment to S. 3217 (sent originally as email)

    April 7, 2010 Letter from Barry Melancon to the Members of the Senate Regarding Potential Aiding and Abetting Amendment to the Senate financial regulatory reform legislation

    October 20, 2009 AICPA Letter to the House Financial Services Committee opposing any amendment allowing for private rights of action under aiding and abetting

    November 18, 2009 AICPA Letter to the Senate Banking Committee opposing the language in the discussion draft allowing for private rights of action under aiding and abetting 

    Staff Contact

    Peter Kravitz
    Director, Congressional Affairs
    202.434.9218
    pkravitz@aicpa.org

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    Congressional and Political Affairs Advocacy

    Overview The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
    Published on November 03, 2014

    Federal Legislative and Regulatory Issues

    Federal Law This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
    Published on October 28, 2014

    Accounting Partnership Retirement Practices

    Article In letters to members of the Equal Employment Opportunity Commission (EEOC), the American Institute of CPAs (AICPA) has asked commissioners to reject staff appeals to investigate and litigate against accounting firms regarding partner retirement provisions
    Published on October 21, 2014

    Preserving the Cash Basis Method of Accounting for CPA Firms

    Article The AICPA is opposed to certain provisions included in tax reform proposals that would limit the availability of the cash basis method of accounting.
    Published on September 29, 2014

    Cash Accounting Bipartisan Letter to the House of Representatives

    Legislative Letters
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    Cash Accounting Senate Letter

    Legislative Letters
    Published on August 07, 2014

    XBRL

    Article Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
    Published on May 20, 2014

    Camp Letter On Cash Basis April 25, 2014

    Legislative Letters The American Institute of CPAs (AICPA) voices strong opposition to draft legislation that would limit the use of the cash method of accounting for pass-through entities and personal service corporations.
    Published on May 08, 2014

    Convergence of International and US Accounting Principles and IFRS

    Article International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) in London is a response to worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards.
    Published on April 17, 2014

    AICPA Letter to SEC on Proposed Regulation Crowdfunding

    Comment Letter AICPA comments on the SEC's proposed new Regulation Crowdfunding under the Securities Act of 1933 and the Securities Exchange Act of 1934 to implement the requirements of Title III of the JOBS Act as published in SEC File No. S7-09-13.
    Published on February 06, 2014

    Jan 2014 - AICPA Statement for the Record regarding Conferences and Travel

    Article AICPA provided a Statement for the Record to the Senate Homeland Security and Government Affairs Committee in  response  to the hearing held on January 14, 2014 entitled, "Examining Conference and Travel Spending Across the Federal Government."
    Published on January 28, 2014

    Cash Basis Letter to Senate Finance Committee from Associations-Jan7-2014

    Legislative Letters Cash Basis Letter to Senate Finance Committee dated Jaunary 7, 2014 from American Council of Engineering Companies, American Dental Association, American Farm Bureau Federation, American Institute of Architects, American Institute of CPAs and S Corporation Association.
    Published on January 22, 2014

    Municipal Advisors

    Issue Brief The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
    Published on January 07, 2014

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

    Article The AICPA believes that the U.S. DOL should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.
    Published on December 30, 2013

    Take Action Legislation Affecting ESOP Appraisers

    Article The AICPA urges FVS section members to seek congressional support of legislation to fix DOL fiduciary proposal on ESOP appraisers S. 273/HR 2041.
    Published on September 18, 2013

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