Can Private Litigation Hold Auditors to Account?

Reflecting on one of Judge Richard Posner's worst opinions

Francine McKenna has a new post on her wonderful Substack The Dig on using private party litigation to police audit firms:

Can private litigation hold auditors to account?

Most of the post is concerned with concerns that SEC CHairman Paul Atkins will basically gut the PCAOB, which is worth reading by itself, but then she turns to discussing the growth of private litigation against auditors.

Photo by Jakub Żerdzicki on Unsplash

All of which called to mind an old case that I teach in Advanced Corporation Law, Cenco Inc. v. Seidman & Seidman.¹ One of the main reasons I first started teaching this case back in the late 1980s was that it was authored by Judge Richard Posner. When I was in law school, most of my professors and many of my then-newly formed Federalist Society friends seemed to worship at the altar of the Posner law and economics cult. When I went into law teaching, as someone who thought of himself as a law and economics guy, most of my fellow L&E academics seemed to also be card carrying members of the Posner fan club.

I never got it. Posner struck me as a provocateur (selling babies, really?), a moral relativist and secularist, and, frankly, not a very good judge. Cenco is a classic example of the sort of nonsense Posner was capable of spouting.

Of course, my current students don’t know much about Posner and what little they do know comes from his late career opinions when he had defected to the left. But I still like teaching it and smacking Posner around a bit.

I hope no one minds getting two posts today. Is that poor Substack practice?