Wang, Baljinder, Krutov and Co, an accounting firm, prepared some statements to
ID: 1138477 • Letter: W
Question
Wang, Baljinder, Krutov and Co, an accounting firm, prepared some statements to be given to the directors of one of the corporations they worked for. The directors had asked them to prepare these but to keep them confidential as they were for the directors’ use only. One of the cleaning staff saw the statements, improperly made a copy and gave it to his brother-in-law who was a self-styled investment counselor. The brother-in-law made more copies of them and got several of his mostly elderly unsophisticated clients to invest in the corporation. The corporation went into bankruptcy three months later. It turned out the statements had been prepared negligently and gave a much rosier picture of the corporation than was accurate. Explain if the investors have any action against the accounting firm.
Hello It's bussiness law questions
Explanation / Answer
Ans. Yes, the investors can have the action against the accounting firm. Though the investors who invested money in the accounting firm got statements illegally but they are the statemensts of the accounting firm which was leaked by the employee of the accounting firm and based on these statements the investors have invested their money in the accounting firm. Since the accounting firm was preparing the bogus statements about its fiscal condition, it is involved in illegal activities and thus the investors can sue the directors or promoters of the accounting firm in the court or sue the firm if the statements stolen were found to be correct and mateched with the statements of the accounting firm. The investors can appeal for compensation in view of fradulant activities and mismanagement carried by accounting firm.
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