Antitrust Law & CPA Liability

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  1. What does Section 1 of the Sherman Act prohibit?
    contracts, combinations and conspiracies that restrain trade
  2. what is considered in the rule of reason test?
    • the nature of the business involved
    • the defendant's position in the industry
    • how the restraint will likely affect the industry
    • thr purported goal of the restraint
  3. Per Se Violations
    • certain categories of restraints are inherently illegal by their very nautre and, thus, are illegal
    • Plaintiff need only show this type of restraint occured; not that the restraint limited competition
    • defendent may not defend by showing the restraint was reasonable
  4. Horizontal Restraints
    • involve agreements between industry players that are on the same marketing level
    • generally illegal per se
  5. What sanctions are available against an individual who has violated the federal anti-trust laws?
    • Violation of the Sherman Act provides for:
    • Fines
    • Imprisonment
    • Civil Damages
  6. Define Conglomerate Merger
    a firm acquires a company in a completely different business.
  7. When does monopoly power exist
    when a firm has sufficient market power to control prices or exclude competition
  8. Under securities act of 1933 section 11: what must a plantiff prove to hold a cpa liable
    • plantiff acquired stock
    • plantiff acquired loss
    • registration statement contained material misrepresentation or material omission of fact
  9. An accountant is prohibited from showing the working papers to anyone without the client's permission except:
    • lawful subpoena
    • surviving member of the firm
    • quality control panel
    • AICPA/State trial board
    • court proceedings
  10. Elements of actual fraud
    • misrepresentation of material fact
    • intent to deceive (knowing the statement was false) scienter
    • actual and justifiable reliance by plaintiff on the the misrepresentation
    • an intent to induce plaintiff's reliance on the misrepresntations
    • and damages
  11. Elements of constructive fraud
    • misrepresentation of material fact
    • defendent acts with gross negligence or recklessly
    • intent to induce plaintiff's reliance
    • actual and justifiable reliance by plaintiff on the the misrepresentation
    • damages
  12. Who is the CPA liable to who negligently gives an opinion on an audit of a client's financial statements?
    • The client
    • Under the majority rule, to any person or limited foreseeable class of persons whom the CPA knows will be relying on the CPA's work.
  13. Ultramares rules
    Limits the CPA liability more narrowly to persons in privity of contract with the CPA (clients) and intended (not forseen) third party beneficiaries.
  14. What penalties may be imposed on a CPA when the CPA breaches contract.
    When a CPA breaches contract for professional services, the client and any third party beneficiary of the contract is entitled to compensatory money damages.
  15. What does a law suit for common law fraud need to succeed?
  16. When can a client claim accountant-client privilege?
    A client can clain client-accountant privilege only in states that have enacted a statute creating such a privilege.
  17. Elements of negligence
    • duty of care
    • breach (lack of due care)
    • causality
    • injury
Card Set
Antitrust Law & CPA Liability
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