Question: (a) Is an auditor liable under Section 10(b) or Rule 10b-5 for overstated earnings resulting from option backdating? (b) Does it matter whether the employees

(a) Is an auditor liable under Section 10(b) or Rule 10b-5 for overstated earnings resulting from option backdating?
(b) Does it matter whether the employees who did the audit in a subsequent year were not aware of the earlier alleged backdating?

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a The US Court of Appeals for the Ninth Circuit held that the plaintiffs had alleged sufficient facts to show scienter and refused to dismiss the case New Mexico State Investment Council v Ernst Young ... View full answer

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