Maxwell v. KPMG LLP: Seventh Circuit Applies Principle of "Loss Causation" in the Context of Negligence Claim Against Accounting Firm, Issues Warning to Bankruptcy Trustees

In an important ruling issued on March 21, 2008, Maxwell v. KPMG LLP, the U.S. Court of Appeals for the Seventh Circuit drew on the concept of “loss causation” from securities law to illustrate why an accounting firm’s alleged malpractice was not the legal “cause” of financial losses claimed by the plaintiff. In addition, the ruling included an equally important admonition to district court judges to be vigilant in policing the litigation judgment exercised by trustees in bankruptcy in order to limit the incidence of frivolous suits. Attached is a Memorandum summarizing the ruling.

Please do not hesitate to use the contact information included in the Memorandum if you have any questions.