24 June 2014
Mayer Brown achieved a significant victory for Moore Stephens Hong Kong (MSHK), an accounting and auditing firm, when the US District Court for the Southern District of New York granted MSHK’s motion for summary judgment on all claims in a securities fraud class action involving Moore Stephens’ work as auditor of Puda Coal, a Chinese company.
Plaintiffs alleged that Moore Stephens should have uncovered an accounting fraud at Puda Coal involving the transfer of its main assets to a company executive and an investment fund. However, the court ruled that the plaintiffs’ expert witness was unqualified to testify on the relevant Public Company Accounting Oversight Board (PCAOB) standards, leaving unchallenged the evidence presented by an expert witness for the defense that Moore Stevens’ work complied with the PCAOB standards. In its opinion, the court concluded that there was no material issue of fact on scienter to present to the jury and that there was no evidence of and no triable issue on subjective falsity.
The Mayer Brown Litigation & Dispute Resolution team included partners Brian Massengill, Dana Douglas and Jim Schroeder (all Chicago) and associates Justin McCarty, Alexandra Newman and Abby Bartine (all Chicago) and Samuel Fung (Hong Kong).