S O X and Auditor Legal Liabilities

S O X and Auditor Legal Liabilities Section 302 Corporate Responsibility over Financial Reporting

Section 302 requires the certification of periodic reports filed with the S E C by the C E O and C F O that the report does not contain any untrue statement of a material fact or omit a material fact necessary to make the statements not misleading.

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Higginbotham v. Baxter Int’l, the court ruled that claims of scienter require more than just an assertion; specific proof of such knowledge must exist.

In re Lattice Semiconductor Corp, the court ruled that 302 certifications did give rise to inference of scienter due to either knowing about improper journal entries and misstating financial statements or knowing that controls were inadequate.

In re WatchGuard Secs Litig., the court held that the individual defendants’ 302 certifications were, by themselves, inadequate to support a strong inference of scienter.