Yesterday, representatives from the House and Senate met to begin the process of merging the financial regulation reform bills that have been separately passed by both bodies, the NYT reports. The White House has asked Congress to submit a proposed bill to President Obama by July 4.

As this process gets underway, auditors, lawyers, bankers and other advisers to public companies are quietly breathing a sigh of relief that one of the items no longer on the table is an amendment proposed by Sen. Arlen Specter that would have overturned the U.S. Supreme Court’s 2008 ruling in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., thereby permitting "aiding and abetting" liability for a company's auditors and others. The final version of the financial reform bill that passed the Senate did not include the Specter amendment.


Tom Hood, CEO of the Maryland Association of CPAs, stated that his group's members were "unanimously upset" about the proposed amendment, leading more than 100 of them to contact Maryland’s senators to voice their opposition. “If somebody overpowers a security guard and robs a bank, would you hold the security guard as liable as the person who robbed the bank? We were becoming the unintended consequence of this sweeping regulation,” he added.

The security guard example may not be completely on point, as the Specter amendment reportedly would have only allowed for aiding and abetting exposure for those who "advise on or assist in structuring securities transactions and who have actual knowledge of securities fraud." Still, secondary actors such as auditors and others are no doubt pleased that the idea of even opening the door to such lawsuits and allowing for trials on the issue of whether defendants did or did not have "actual knowledge" of fraud now appears to be off the table.