Stanley Parzen

Stanley Parzen focuses on complex litigation in federal and state courts and in arbitration, including trials and appeals. He devotes the majority of his practice to the defense of accounting firms and other professionals.

Stanley has represented accounting firms in connection with a wide variety of claims brought by clients and client successors (trustees, receivers and liquidators), including claims relating to allegedly faulty audit work, often relating to failed banks, savings associations, or insurance companies; allegedly faulty computer systems design; and allegedly improper tax advice and tax return preparation.

A variety of issues has arisen in these cases, including the auditor’s obligation with respect to alleged internal controls at an audit client, whether the knowledge and actions of the client’s officers and directors and shareholders should be attributed to the client, whether the deepening insolvency theory is an appropriate theory or measure of damages, accounting for subprime loans and securitizations as well as loss reserves including troubled debt restructurings, and whether the actions of the accountant had any causal relationship to the damages sought in the case.

In addition, he has provided representation to accounting firms in numerous federal securities and derivative actions brought by stockholders in diverse federal and state courts as well as other claims brought by third parties.

A variety of issues has arisen in these cases including the propriety of the use of the fraud on the market theory, whether the plaintiffs had ever pleaded a claim for fraud under the applicable pleading standards, and whether loss reserves and similar balance sheet items are matters of fact or opinion.

He has also represented a number of accounting firms in disputes with partners, employees and retired partners, primarily relating to covenants not to compete and retirement benefits. Stanley has also represented network entities consisting of member firms in disputes with former member firms and as defendants in litigation.

Stanley has also represented accounting firms and a coordinating entity in matters before various federal and state regulatory bodies. Among other such work, he has represented clients in investigations conducted by the SEC, the PCAOB, the FDIC and the Comptroller of the Currency. He has also represented a number of firms before various state boards of accountancy.

Education :

• Earlham College, BA
• Harvard Law School, JD, cum laude, Harvard Law Review

Admissions :

• New York
• US District Court for the District of Colorado
• US Court of Appeals for the Fourth Circuit
• US District Court for the Eastern District of Wisconsin
• US District Court for the Western District of Michigan
• US District Court for the Northern District of Illinois
• US District Court for the Southern District of New York

Experience :

• Successfully argued motion to dismiss in purported securities class action brought by stockholders in First NBC Corporation against Ernst & Young LLP, and after final judgment was entered in favor of Ernst & Young LLP obtained dismissal of appeal filed by the same plaintiffs. Kinzler v. First NBC Banc Holding Company, 2:16-cv- 04243-KDE-JVM (E. D. La. May 11, 2017).
• Compelled arbitration of claim brought by former employee purportedly alleging tortious interference with prospective job placements with new employers and had this order affirmed on appeal. Hangebrauck v. Ernst & Young LLP, 2017 Ill. App. 1st 153430-U (1st Dist., February 21, 2017).
• Successfully argued that a claim brought against Ernst & Young and a third party should be sent to arbitration both as to Ernst & Young and as to the third party, and obtained affirmance of the order compelling arbitration. Discovery Resources Inc. v. Ernst & Young US LLP, 2016-Ohio-1293 (Lorain County, Ohio App. March 28, 2016).
• 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).
• Successfully argued that an accounting firm could not be liable for negligence to a prospective employee of an audit client who relied upon audit report in accepting employment.  Ellis v. Grant Thornton LLP, 530 F.3d 280 (4th Cir. 2008).
• Successfully argued that the trustee of a bankrupt company could not sue the auditor of the company for failure to include a going concern in the audit report.  Fehribach v. Ernst & Young LLP, 493 F.3d 905 (7thCir. 2007).
• Harden v. Firstmark, SD Ind., lawsuit brought by stockholders of financial services and insurance company against Price Waterhouse alleging failure to issue a going concern qualification; court rejected fraud created the market theory.