Professional Negligence

Accounting Malpractice and Negligence – Boca Raton, West Palm Beach and Fort Lauderdale, Florida Litigation Attorney

Published on: September 12, 2014 | By Russell L. Forkey, P.A.

Accounting Malpractice and Negligence – Boca Raton, West Palm Beach and Fort Lauderdale, Florida Commercial Litigation and Elder Financial Abuse Attorney:

SEC Charges Bank Holding Company in Delaware with Improper Accounting and Disclosure of Past Due Loans

The Securities and Exchange Commission recently announced accounting and disclosure fraud charges against a Delaware-based bank holding company for failing to report the true volume of its loans at least 90 days past due as they substantially increased in number during the financial crisis.

South Florida – Certified Public Accountant Independence and Negligence Litigation and Arbitration Attorney

Published on: July 15, 2014 | By Russell L. Forkey, P.A.

Boca Raton, Deerfield Beach, Delary Beach, Boynton Beach, Lantana, Lake Worth and West Palm Beach Certified Public Accountant and Public Accountant Independence and Negligence Litigation and Arbitration Attorney:

SEC Charges Ernst & Young With Violating Auditor Independence Rules in Lobbying Activities

The Securities and Exchange Commission recently charged Ernst & Young LLP with violations of auditor independence rules that require firms to maintain their objectivity and impartiality with clients.

Accountant’s Liability to Third Parties – Broward and Palm Beach Florida Accounting Negligence Litigation and Arbitration Attorney

Published on: December 7, 2013 | By Russell L. Forkey, P.A.

Accountant’s Liability to Third Parties – Florida Accounting Negligence Litigation and Arbitration Attorney – Russell L. Forkey, Esq.

WHEN AN ACCOUNTANT FAILS TO EXERCISE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS OF HIS CLIENT AND WHERE THAT ACCOUNTANT PERSONALLY DELIVERS AND PRESENTS THE STATEMENTS TO A THIRD PARTY TO INDUCE THAT THIRD PARTY TO LOAN TO OR INVEST IN THE CLIENT, KNOWING THAT THE STATEMENTS WILL BE RELIED UPON BY THE THIRD PARTY IN LOANING TO OR INVESTING IN THE CLIENT, IS THE ACCOUNTANT LIABLE TO THE THIRD PARTY IN NEGLIGENCE FOR THE DAMAGES THE THIRD PARTY SUFFERS AS A RESULT OF THE ACCOUNTANT’S FAILURE TO USE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS, DESPITE A LACK OF PRIVITY BETWEEN THE ACCOUNTANT AND THE THIRD PARTY?

The Florida Supreme Court answered this question in the affirmative in the case of First Florida Bank, N.A. v. Max Mitchell & Co., 558 So. 2d 9 (Fla. 1990). In this matter, the court provided two examples to illustrate this circumstance.

Corporation Annual Report (10-K) – Florida Business Practice and Corporate Litigation Attorney

Published on: October 5, 2013 | By Russell L. Forkey, P.A.

Corporate Annual Report (10-K) – Florida Business Practice and Corporate Litigation and Arbitration Attorney:

An “Annual Report” is a record of a corporation’s annual financial condition that is required to be distributed to shareholders under Securities and Exchange Commissions rules and regulations. Included in the report is a description of the company’s operations as well as its certified balance sheet and income statement. The full version of the annual report is called the 10-K. It is available from the company or or on-line at the Edgar Website of the SEC. Other reports issued by a reporting company include forms 10-Q (quarterly reports) and 8-K (material disclosures).

As an investor, these reports provide invaluable information when considering to purchase, hold or sell a security. However, please keep in mind that this information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning this post, you should contact a qualified professional.

Frank Dappah and Yatalie Capital Management – Florida Excessive Investment Advisory Fee Litigation and FINRA Arbitration Attorney

Published on: September 28, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Frank Dappah and Yatalie Capital Management, et al., Civil Action No. 3:13-cv-00546 (W.D.N.C.)

SEC Charges Charlotte Investment Advisors with Excessive Fee Scheme

Recently, the Securities and Exchange Commission filed an action in federal court in the Western District of North Carolina, charging Frank Dappah of Charlotte, NC, and his firm, Yatalie Capital Management (a/k/a Yatalie Capital Management Co, Creato Funds L.P., a/k/a Yatalie Capital, Inc., a/k/a Creato Funds, L.P., a/k/a Yatalie Capital Management Co.), a sole proprietorship, with violations of the federal securities laws for charging grossly excessive fees to their advisory clients without authorization or notice and other violations. The Commission’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an asset freeze against the defendants.

Financial Abuse of Older Adults – Florida Elder Abuse and Financial Loss FINRA Arbitration and Litigation Attorney

Published on: September 27, 2013 | By Russell L. Forkey, P.A.

Florida Elder Abuse and Financial Loss FINRA Arbitration and Litigation Attorney:

Federal Regulators Issue Guidance on Reporting Financial Abuse of Older Adults

Seven federal regulatory agencies recently issued guidance to clarify that the privacy provisions of the Gramm-Leach-Bliley Act generally permit financial institutions to report suspected elder financial abuse to appropriate authorities.

Cash Basis of Accounting, Accrual Method of Accounting and Modified Cash Basis of Accounting – Florida Breach of Contract, Breach of Fiduciary Duty, Fraud and Accounting Negligence Litigation Attorney

Published on: August 15, 2013 | By Russell L. Forkey, P.A.

Cash Basis of Accounting, Accrual Method of Accounting and Modified Cash Basis: South Florida Accounting Negligence and Breach of Contract Commerical Litigation Attorney, Russell L. Forkey, Esq.

The Cash Basis accounting method recognizes revenues when cash is received and recognizes expenses when cash is paid out. In contrast, the Accrual Method of accounting recognizes revenues when goods or services are sold and recognizes expenses when obligations are incurred. A third method, called Modified Cash Basis uses accrual accounting for long-term assets and is the basis usually referred to when the term cash basis is used.

Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

Sales Practice Violations – Discretionary Trading Without Authorization, Unauthorized Trading, Unsuitable and Excessive Trading and Churning – South Florida FINRA Arbitration and Litigation Attorney

Published on: July 3, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission Sustains FINRA Disciplinary Action against Registered Representative and Supervisor

The Securities and Exchange Commission has sustained disciplinary action by the Financial Industry Regulatory Authority (“FINRA”) against William J. Murphy and Carl M. Birkelbach, formerly associated with member firm Birkelbach Investment Securities, Inc. In its opinion, the Commission sustained FINRA’s finding of sales practice violations by Murphy, which included discretionary trading without authorization, unauthorized trading, unsuitable and excessive trading, churning, and the creation and distribution of misleading communications. In one customer account at issue, Murphy engaged in excessive options trading that generated over one million dollars in commissions in the span of approximately three-and-half years. The Commission also sustained FINRA’s findings of supervisory violations by Birkelbach for ignoring obvious and repeated red flags with regard to Murphy’s handling of customer accounts. Finally, the Commission has sustained FINRA’s imposition of sanctions: a bar in all capacities and the disgorgement of $585,174.67 for Murphy and bar in all capacities for Birkelbach.

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Accounting Fraud and Accounting Negligence (Generally Accepted Accounting Principles) Florida Litigation and Arbitration Attorney

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Florida Accounting Fraud and Accounting Negligence Litigation Attorney:

Court Enters Final Judgments against JBI, Inc. and Former Officer in Accounting Fraud Case

The Securities and Exchange Commission announced that a Massachusetts federal court entered final judgments by consent on June 26, 2013 and March 20, 2013, respectively, against John W. Bordynuik (“Bordynuik”) and JBI, Inc. (“JBI”), two defendants in a fraud action filed by the Commission in 2012. The Commission alleged in its complaint that JBI, its then CEO, John Bordynuik, and its former CFO, Ronald Baldwin, Jr. (“Baldwin”), engaged in a scheme to commit securities and accounting fraud in 2009. In the consent judgments, the Court ordered JBI to pay $150,000 and Bordynuik to pay $110,000 in civil monetary penalties.

Professional Negligence (Malpractice) Claims Against Accountants (CPA), Engineers, Surveyors, Architects and Others – Florida State and Federal Court Litigation and AAA Arbitration Attorney

Published on: May 29, 2013 | By Russell L. Forkey, P.A.

Professional Negligence Claims Against Accountants, Engineers, Surveyors, Architects and Others – Florida State and Federal Litigation and AAA Arbitration Attorney:

In Florida, professional negligence claims require four elements: (1) existence of a legal duty, (2) breach of the duty, (3) proximate causation, and (4) actual loss. Generally, this duty of care only exists between parties who are in privity of contract with one another. The contractual relationship of the accountant, engineers and others and their clients gives rise to tort liability for professional negligence.

In limited circumstances, however, a professional can be liable to non-contractual third parties for economic damages arising from professional negligence. The Florida Supreme Court adopted Restatement (Second) of Torts § 552 to determine an accountant’s liability for negligent misrepresentation. It provides in pertinent part: