Justin A. McCarty is a co-leader of the firm’s Professional Liability group and focuses his practice on defending accounting firms and their professionals, including non-US network firms facing litigation or regulatory investigations in the US. For nearly 10 years, Justin has represented accounting firms and their professionals in complex litigation in US federal and state courts and before arbitration panels and regulatory bodies. His work has included the representation of all four Big 4 firms, as well as numerous other firms.
Justin has represented accounting firms in connection with a variety of claims, including allegedly negligent or fraudulent audit work, allegedly deficient tax advice and allegedly negligent consulting work. These cases involved issues such as: the audit firm’s obligations with respect to an audit client’s internal controls, to whom an auditor owes a duty, auditor independence, alleged causal relationships between an auditor’s work and alleged damages and professional qualifications to perform specific work.
He currently represents an accounting firm in first-of-its-kind litigation by the Federal Deposit Insurance Corporation against an audit firm that provided outsourced internal audit services to a failed financial institution. Further, he has represented accounting firms in a variety of federal securities and derivative suits filed by stockholders and other third parties.
These cases focused on issues such as: subjective falsity, the pleading standards for negligence and fraud, securities tracing, loss causation and negative causation, substantive defense of audit work, expert witness qualifications and the demand requirement for derivative suits. Justin also has experience representing accounting firms in disputes with their former partners and network firms.
In addition to litigation experience, Justin has represented accounting firms and their professionals in investigations by the Securities and Exchange Commission, the Public Company Accounting Oversight Board and the Illinois Department of Financial and Professional Regulation.
Justin’s representation of clients in these matters included negotiating with regulators, providing written submissions and representing clients in depositions or testimony. Justin currently serves as a co-chair of the American Bar Association’s Professional Services Liability Section.
- The University of Iowa College of Law, JD
- Saint Olaf College, BA
- US District Court for the Northern District of Illinois
- US District Court for the Southern District of Illinois
- Obtained summary judgment for Ernst & Young LLP when the Southern District of New York held that an alleged corrective disclosure did not relate to the audit report of the auditor. In re OSG Securities Litigation, 2015 WL 3466094 (S.D.N.Y. 2015).
- Representing Crowe Horwath LLP in first-of-its-kind litigation by the Federal Deposit Insurance Corporation on behalf of the failed Colonial Bank and the Trustee for Colonial Bank’s holding company for allegedly negligent outsourced internal audit services. Colonial BancGroup, Inc. v. PricewaterhouseCoopers LLP, CV No. 11-746.
- Obtained appellate victory for Crowe Horwath LLP when the US Court of Appeals for the Tenth Circuit ruled that an action brought under Section 11 of the Securities Act of 1933 must show that opinions in public statements are known to be false or at least without a reasonable basis. MHC Mutual Conversion Fund, L.P. v. Crowe Horwath LLP, et al, 336 F.3d 1109 (C.A. 10 2014).
- Representing accounting firms and their audit partners, both from the US and from non-US member firms, in SEC and PCAOB investigations.
- Obtained order compelling arbitration for Grant Thornton International in litigation related to claims by former partners of Grant Thornton Hong Kong. Order affirmed on appeal. Tang Chung Wah v. Grant Thornton Intern. Ltd., 2014 IL App. (1st) 1131808-U (Aug. 27, 2014).
- Advising accounting firms on the forms of engagement letters and other risk issues.
- Represented Ernst & Young LLP in a Kansas arbitration relating to claims of fraudulent and negligent audit services.
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