Granting defendant auditor’s motion to dismiss plaintiffs’ class action securities fraud claims, a federal district court held, among other things, that defendant could not be found liable under section 10(b) of the Securities Exchange Act of 1934 or Rule 10b-5 for statements that the auditor’s client – but not the auditor – made to the public. Plaintiffs argued that the defendant auditor certified as true a public company’s materially false quarterly financial statements and, thereby, shared liability with the company for the misstatements. Rejecting this argument, the Court emphasized that pursuant to the Exchange Act, there is no liability for merely aiding and abetting a false statement to the investing public because, under United States Supreme Court precedent, section 10(b) “prohibits only the making of a material misstatement (or omission).”

Although plaintiffs alleged that the auditor “signed off” on the purportedly misleading quarterly financial statements with knowledge that investors would rely on them once its client released them, plaintiffs did not allege that the auditors themselves made, or caused to be made, any misrepresentation in connection with the quarterly statements. After characterizing this component of the plaintiffs’ claim as “a textbook case of aiding and abetting,” the Court ruled that the allegations were insufficient. (In re aaiPharma, Inc. Securities Litigation, 2007 WL 3342286 (E.D.N.C. Nov. 6, 2007))