AUSA Life Insurance Co. v. Ernst & Young
United States Court of Appeals for the Second Circuit
206 F.3d 202 (2d Cir. 2000)
Relevant factsFree
AUSA Life Insurance Company (AUSA) (plaintiff) purchased notes in JWP, Inc. (JWP) over several years, relying on financial statements audited by Ernst & Young (E&Y) (defendant) that were repeatedly, and knowingly, inaccurate and not GAAP-compliant. JWP's aggressive, debt-financed acquisitions eventually failed, leading to bankruptcy and roughly $100 million in losses to AUSA. The district court dismissed AUSA's suit against E&Y for failing to prove loss causation, and AUSA appealed.
IssueFree
Whether, under securities laws, loss causation from a misrepresentation requires that the plaintiff's damages be a foreseeable consequence of that misrepresentation.