Revenge for Stockholders: Lawsuits for the Big 5?
The suit is based on a negative turn in earnings that brought stock prices down. Stockholders found fault with E&Y because they say the Big 5 firm should have warned Source and its owners. Source is a Dallas-based company offering interactive programming and content.
Industry analysts commented that a downturn in the stock market may signal similar lawsuits, but members of the accounting profession say this speculation won't prevent them from auditing the books of public companies, according to C.S. "Bud" Kulesza, president of the Institute of Management Accountants .
Lawsuits of this type also are extremely rare because attorneys say it is too difficult to prove any wrongdoing on the firm's part. E&Y filed a 30-day extension in late August in order to provide answers to the lawsuit.