August 2006

By Andrew J. Entwistle and Robert M. Travisano — The Business Suit, DRI

The New Jersey Supreme Court recently held that the imputation doctrine does not bar a lawsuit against a negligent corporate auditor brought by a litigation trust on behalf of a debtor corporation's shareholders. According to the court's 5-2 opinion in NCP Litigation Trust v. KPMG A.2d, 2006 WL 1770178 (June 28, 2006), such a suit is allowed, regardless of whether the auditors had actively participated in or had direct knowledge of the corporation's fraud.

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