* (c) 2004, Sean M. O’Connor, Assistant Professor of Law, University of Washington School of Law. J.D., Stanford Law School; M.A., Arizona State University; B.A., University of Massachusetts. I would like to thank William Bratton, John Coffee, Larry Cunningham, and Brian Mayhew for comments on an earlier draft. I am especially indebted to my research assistant, Mörk Murdock, for his tireless help in assembling the history of the securities laws, as well as to the amazing staff of the Marian Gould Gallagher Law Library at the University of Washington School of Law for their help with all aspects of my research on this subject. I gratefully acknowledge the financial support of the University of Washington School of Law for my research and drafting of this article.
1 See Securities Act of 1933: Hearings on S. 875 Before the Senate Comm. on Banking and Currency, 73rd Cong. (1933) [hereinafter Hearings] (statement of Col. Arthur H. Carter), reprinted in 2 Legislative History of the Securities Act of 1933 and Securities Act of 1934, at 56–62 (comp. by J.S. Ellenberger & Ellen P. Mahar, 1973) [hereinafter Legislative History].
2 See id. at 56, 60.
3 Id. at 56.
4 Id.
5 Id. at 57.
6 See Hearings, supra note 1, at 58 (statement of Col. Arthur H. Carter).
7 Pub. L. No. 73-22, 48 Stat. 74 (codified as amended at 15 U.S.C. §§ 77a--77aa (2000)) (also known as the “Fletcher-Rayburn Securities Act of 1933” and the “Truth in Securities Act”).
8 15 U.S.C. § 77aa, sched. A, ¶ 25.
9 See 15 U.S.C. § 77k. Some limitations on this liability are discussed infra notes 310–441.
10 See infra notes 22–238 and accompanying text.
11 See infra notes 22–238 and accompanying text.
12 This claim also has been made under the similar annual certification required by rules promulgated under the later Securities Exchange Act of 1934. Pub. L. No. 73-291, 48 Stat. 881 (codified as amended at 15 U.S.C. §§ 78a–78hhh (2000)).
13 See infra notes 447–489 and accompanying text.
14 See generally Sean M. O’Connor, The Inevitability of Enron and the Impossibility of “Auditor Independence” Under the Current Audit System (2002), available at http://papers.ssrn.com/
sol3/papers.cfm?abstract_id=303181 (date posted Mar. 11, 2002).

15 See infra notes 22–238 and accompanying text.
16 See infra notes 239–285 and accompanying text.
17 See infra notes 286–310 and accompanying text.
18 See infra notes 311–446 and accompanying text.
19 15 U.S.C. §§ 78a–78hhh (2000).
20 See infra notes 447–473 and accompanying text.
21 See infra notes 474–490 and accompanying text.
22 See A.C. Littleton, Accounting Evolution to 1900, at 12–21 (3rd ed., Garland Publ’g, Inc. 1988). In 1494, an Italian monk named Fra Luca Pacioli formalized and catalogued the then-current state of bookkeeping, including a description of early double-entry bookkeeping, in his book Summa de Arithmetica Geometria, Proportioni et Proportioninalita. See Richard H. Macve, Pacioli’s Legacy, in Accounting History from the Renaissance: A Remembrance of Luca Pacioli 3–30 (T.A. Lee et al. eds., 1996) [hereinafter Accounting History].
23 See Littleton, supra note 22, at 165; see also John L. Carey, The Rise of the Accounting Profession: From Technician to Professional, 1896–1936, at 17–19 (1969).
24 See Carey, supra note 23, at 18–19; Littleton, supra note 22, at 265.
25 Today one such position is that of the company “controller” or “comptroller.” See A Handbook of Business Law Terms 128–29, 145 (Bryan A. Garner ed., 1999).
26 See Littleton, supra note 22, at 271–84, 361–68. In fact, the title of “accomptant” for an independent professional does not seem to appear in directories in England until after 1766. See id. at 267.
27 John Richard Edwards, Financial Accounting Practice 1600–1970: Continuity and Change, in Accounting History, supra note 22, at 31–45.
28 See Joel Seligman, Corporations: Cases and Materials 3–18 (1995).
29 See id.
30 See Littleton, supra note 22, at 155–61. “Agency bookkeeping” developed from the “charge and discharge” records kept by servants for masters arising in the medieval feudal system and pertained simply to explaining the servant’s activities with the master’s goods and property. See id; see also infra note 112 and accompanying text. “Proprietorship bookkeeping” focused instead on the “continuing investment of capital variously employed and periodically summarized.” See Littleton, supra note 22, at 156.
31 See Littleton, supra note 22, at 165.
32 See Seligman, supra note 28, at 3–18; see also Littleton, supra note 22, at 205–22.
33 See Carey, supra note 23, at 18; Edwards, supra note 27, at 36. Note that the Industrial Revolution commenced in England before it was brought to the United States. Thus, in many corporate and securities law advances, developments occurred in England before appearing in the United States.
34 See Edwards, supra note 27, at 35–40.
35 See id. The explosive growth of the rail system in England led to one of the earliest episodes when capital requirements were so great that investment by a significant portion of the general public was necessary. See id. It would appear that episodes such as this— despite the ensuing scandals—actually whetted the public’s appetite for corporate securities investment, as some individuals watched others become fabulously rich off a few well-placed investments.
36 See id.
37 See Littleton, supra note 22, at 271–84.
38 See Seligman, supra note 28, at 11–16 (stating that the bubble was a result of a myriad of companies attempting to offer shares to the public in emulation of the success of the South Sea Company).
39 See Katharina Pistor et al., The Evolution of Corporate Law: A Cross-Country Comparison, 23 U. Pa. J. Int’l Econ. L. 791, 806–07 (2002); Larry E. Ribstein, Bubble Laws, 40 Hous. L. Rev. 77, 94–96 (2003). Because European countries traditionally viewed incorporation as possible only by permission of the sovereign—the “concession” system—individuals in Great Britain simply had no rights to incorporate without such a concession prior to the 1800s. See Pistor et al, supra, at 806–07. They nonetheless found ways to skirt this general restriction, sometimes by buying charters from “moribund” companies. Id. at 806. The passage of the Bubble Act itself seemed to suggest that, at other times, enterprising individuals simply waffled on the form of their business venture, running the grey area between a large partnership and a true “corporation”—with or without “legal authority.” See 6 Geo., c. 18 (1719) (Eng.). Thus, there was a need to “reassert” the exclusive authority of the sovereign.
40 6 Geo., c. 18. The first granting power clearly was directed to restrict the power to create any more overseas trading expeditions, such as the original South Sea Company, to the Crown. “Bottomry” is the maritime law term for secured lending transactions for use, equipment, or repair of a ship, using the ship itself (or its keel or “bottom”) as security. Black’s Law Dictionary 197 (8th ed. 2004). In the event that the ship was lost during a specified journey or time period, the lender lost his money. See id.
41 6 Geo., c. 18. The captions of the relevant sections of the Bubble Act state, “After 24 June 1720, all undertakings tending to the prejudice of trade, and all subscriptions, &c. thereto, or presuming to act as corporate bodies without legal authority, and all acting under obsolete charters, &c. shall be deemed illegal and void.” Id.
42 See Ribstein, supra note 39, at 96.
43 “An unincorporated association of individuals possessing common capital, the capital being contributed by the members and divided into shares, of which each member possesses a number of shares proportionate to the member’s investment.” Black’s Law Dictionary, supra note 40, at 298.
44 6 Geo. 4, c. 91 (Eng.).
45 7 & 8 Vict., c. 110 (Eng.).
46 See id. sched. C (setting forth prescribed information in Schedule C). This legislation moved England permanently away from the sole “concession” model of corporate bodies and into the modern era of “free registration.” See Pistor, supra note 39, at 806–07.
47 7 & 8 Vict., c. 110. Clearly, the Joint Stock Companies Act of 1844 established a forerunner of the Securities and Exchange Commission (the “SEC”) and anticipated modern securities regulation through registration and disclosure. See id. at § 4.
48 See id. §§ 4, 7.
49 At the same time, England was not the first to move to free registration; that honor fell to the State of New York in 1811. See Act of Mar. 22, 1811, ch. 67, 1811 N.Y. Laws 151–52.
50 See infra notes 106–230 and accompanying text.
51 See 7 & 8 Vict., c. 110. That is, the Joint Stock Companies Act of 1844 did not extend to those companies created by royal charter or Parliamentary act, respectively. See id.
52 8 & 9 Vict., c. 16 (Eng.); see also 8 Halsbury’s Statutes of England and Wales 8 (Andrew Davies ed., 4th ed. 1999) [hereinafter Halsbury’s Statutes].
53 See infra notes 106–238 and accompanying text.
54 7 Will. 4 & 1 Vict., c. 73, §§ 2–32 (Eng.).
55 Overall, governance of the corporation is not as detailed in the Chartered Companies Act of 1837 as it is under either the Joint Stock Companies Act of 1844 or the 1845 Companies Clauses Act. This is perhaps because fewer corporations were being formed by charter and/or because the Crown granted more deviation in governance structures among its chartered companies than Parliament was granting in its statute companies. See Companies Clauses Act, 1845, 8 & 9 Vict., c. 16; Chartered Companies Act, 1837, 7 Will. 4 & 1 Vict., c. 73.
56 See infra notes 106–238 and accompanying text.
57 See infra notes 106–238 and accompanying text.
58 Littleton, supra note 22, at 191.
59 Id.
60 See id. at 193.
61 This view finds its greatest expression much later, of course, in the seminal work by Adolph A. Berle, Jr. and Gardiner C. Means on the agency implications of separated ownership and management. See generally A. Berle & G. Means, The Modern Corporation and Private Property 112–16 (rev. ed. 1968) (1932).
62 See Littleton, supra note 22, at 205–06.
63 See id. at 203.
64 See infra notes 106–238 and accompanying text.
65 See Seligman, supra note 28, at 3–18.
66 See, e.g., R.R. Palmer & Joel Colton, A History of the Modern World 435 (6th ed. 1984).
67 See Littleton, supra note 22, at 255.
68 See Carey, supra note 23, at 18–22, 34 (noting, for example, 11 accountants listed in London in 1799, growing to 210 by 1850; compared with 14 accountants in New York in 1850, growing to 115 by 1886).
69 See id. at 19; see also Inst. of Chartered Accountants of Scot., ICAS Celebrates 150 Years, at http://www.icas.org.uk/site/cms/v4_newsArticleView.asp?article=2957 (last visited Oct. 1, 2004). The original charter was granted to the Society of Accountants in Edinburgh, while the Institute of Accountants and Actuaries in Glasgow received its royal charter in 1855, and the Society of Accountants in Aberdeen received its royal charter in 1867. See Carey, supra note 23, at 19; see also Inst. of Chartered Accountants of Scot., supra. Collectively, the societies were known as the “Chartered Accountants of Scotland,” and their members were the only individuals in the United Kingdom who could use the designation “Chartered Accountant” or “CA.” See Carey, supra note 23, at 19; see also Inst. of Chartered Accountants of Scot., supra. A Supplemental Charter in 1951 merged the three societies and gave rise to the current name. See Carey, supra note 23, at 19; see also Inst. of Chartered Accountants of Scot., supra.
70 See Carey, supra note 23, at 19–20; see also Inst. of Chartered Accountants in Eng. & Wales, Governance and Structure: History and Overview, at http://www.icaew.co.uk/
index.cfm?AUB=TB2I_49070,MNXI_49070&route=11295,P,11388,11389,49070 (last visited Oct. 1, 2004). Local societies in London, Liverpool, Manchester, and Sheffield were merged to create the Institute of Chartered Accountants in England and Wales (the “ICAEW”). See Carey, supra note 23, at 19; see also Inst. of Chartered Accountants in Eng. & Wales, supra.

71 See Carey, supra note 23, at 22; see also Am. Inst. of Certified Pub. Accountants, Summary of AICPA Operations, at http://www.aicpa.org/about/summary.htm (last visited Oct. 1, 2004).
72 See Carey, supra note 23, at 20, 39. “Fellow Chartered Accountant” (“FCA”) signified a partner or proprietor in practice, while “Associate Chartered Accountant” (“ACA”) signified a qualified member of an FCA’s staff, or a member of the ICAEW not in active practice. Both FCAs and ACAs might be referred to casually as “chartered accountants.” See id. at 20; see also Inst. of Chartered Accountants in Eng. & Wales, supra note 70.
73 Act of Apr. 17, 1896, ch. 312, 1896 N.Y. Laws 263–64. The original law required those seeking the “certified public accountant” (“CPA”) designation, including use of the abbreviation “C.P.A.” or any similar “words, letters or figures” that would indicate the same (1) to be either U.S. citizens, or to have declared an intention to so become, (2) to reside or to have a place of regular business in New York, (3) to be over the age of twenty-one, and (4) to be of good moral character. Id. at § 1. Certification authority fell to the Regents of the University of the State of New York. See id. at §§ 1–2; People v. Marlowe, 203 N.Y.S. 474, 474 (Ct. Sp. Sess. 1923). The Regents were empowered to create a board of examiners, that would be comprised of three members, all of whom were to be CPAs beginning after 1897. See Act of Apr. 17, 1896, § 2. Certification could be revoked for cause after notice and a hearing. See id. The examination requirement could be waived only for public accountants in practice for at least one year before passage of the Act, provided that such accountant applied for waiver within one year after passage of the Act. See id. at § 3. Violations of the Act were made misdemeanors. See id. at § 4.
74 See Act of Mar. 29, 1899, No. 17, 1899 Pa. Laws 21–22.
75 See Act of Apr. 10, 1900, ch. 719, 1900 Md. Laws 1148–1149.
76 See Act of Mar. 23, 1901, ch. 213, 1901 Cal. Stat. 645–646.
77 See Act of Mar. 12, 1903, ch. 72, 1903 Wash. Laws 99–101.
78 See Act of May 15, 1903, 1903 Ill. Laws 281–283.
79 See Act of Apr. 5, 1904, ch. 230, 1904 N.J. Laws 400–404.
80 See Act of June 5, 1905, 1905 Fla. Laws ch. 5425, §§ 106–108.
81 See Act of May 4, 1905, No. 92, 1905 Mich. Pub. Acts 130–132.
82 See Inst. of Chartered Accountants in Eng. & Wales, supra note 70; Inst. of Chartered Accountants of Scot., supra note 69; see also Inst. of Chartered Accountants in Eng. & Wales, Royal Charter of the 11th May 1880 [hereinafter Royal Charter], available at http://www.icaew.co.uk/index.cfm?AUB=TB2I_29914,MNXI_29914 (last visited Oct. 1, 2004). Of note, the ICAEW’s 1880 Royal Charter also prohibits FCAs from splitting fees with persons in other professions, including fees in the form of commissions, which anticipates similar prohibitions coming into effect much later in the U.S. profession. See Royal Charter, supra.
83 Carey, supra note 23, at 20 (quoting Sir Harold Howitt, The History of the Institute of Chartered Accountants in England and Wales (1966)). In fact, the ICAEW’s Royal Charter was premised explicitly on the hope that such a charter would bring “public recognition of the importance of the profession and would tend to gradually raise its character.” Royal Charter, supra note 82.
84 See Littleton, supra note 22, at 282–84.
85 See Carey, supra note 23, at 21–22, 27–28.
86 See id. at 21–22, 27, 33–34.
87 This reluctance to hire U.S. accountants was especially pronounced in the period before U.S. state CPA laws came into effect.
88 See Carey, supra note 23, at 26–28, 34.
89 PricewaterhouseCoopers, LLP, for example, was established by British chartered accountants in the United States. See id. at 27–28.
90 See id. at 25–26.
91 The discussion in these paragraphs does not encompass the imminent arrival of the expanded use of audited statements for the benefit of creditors and other third parties, which will be discussed below. See infra notes 326–338 and accompanying text.
92 See Ultramares Corp. v. Touche, 174 N.E. 441, 444 (N.Y. 1931). This case also contemplates a duty not to defraud any foreseeable users of the accountant’s audit certificates, as will be discussed below. See infra notes 311–444 and accompanying text.
93 See Ultramares, 174 N.E. at 448.
94 See supra notes 73–81.
95 See, e.g., supra note 73.
96 See Carey, supra note 23, at 43–45.
97 See Marlowe, 203 N.Y.S. at 479.
98 In fact, other accountants, along with the precursor of the American Institute of Certified Public Accountants (the “AICPA”), had pushed for legislation recognizing the profession as early as 1894. See Carey, supra note 23, at 43–44. This is not surprising given the effect that chartering seems to have had on the prestige of their British and Scottish counterparts.
99 Marlowe, 203 N.Y.S. at 477; Carey, supra note 17, at 43–44.
100 See supra notes 74–81.
101 In the United Kingdom, this problem likely was blunted or was eliminated simply because of the broader power of the Crown.
102 See, e.g., Marlowe, 203 N.Y.S. at 475--76.
103 Id. at 476–77. Legislation was “in the public interest and for the general welfare” in order to “regulate the highly skilled and technical profession of public [accounting].” Id.
104 See id. at 477. Perhaps this was yet another reason for adopting a limited accreditation model in the United States, rather than a strict regulation of all accountants.
105 See Carey, supra note 23, at 44–45. John L. Carey further notes that the title “public accountant” was so well established by individual accountants and in the names of professional associations, that “the simple addition of the prefix ‘certified’ seemed to meet with general approval.” Id. at 45. But perhaps state legislatures preferred it because it was more accurate; they were establishing criteria to certify accounting professionals much as they provided for certification of other professionals, such as doctors and lawyers. There was simply no “charter” or “chartering” involved.
106 See Littleton, supra note 22, at 259 (stating that “[o]ne of the elements of accounting which definitely distinguishes it from bookkeeping is auditing”).
107 See id. For background on Fra Luca Pacioli and his contributions, see supra note 16.
108 See Littleton, supra note 22, at 260–61. For example, beginning in 1310, “‘six good men of the city, elected in the presence of the whole commonalty’” were to audit the chamberlain of the City of London. Id.
109 See id.
110 See id. at 261–62. The auditor’s importance in the manor is reflected in the following statement:
“The auditor being the laste of all officers, is to bee judge betwixte the lorde and his accomptants, and to deale trulie for and beetween all parties, and upon the determination of his audite, to presente to his lorde by booke or breviate, all his receipts, expenses, imprestes; whatsoever, with the remaines of monye, if any bee.”
Id. (quoting an unsigned statement written in 1605). Further, an early fourteenth century book on estate management advised that “‘[t]he auditors ought to be faithful and prudent.’” Id. at 262 (quoting Walter of Henley, Husbandry).
111 See id. at 262 (“[A] statute of Edward I in 1285 . . . provided that servants found ‘in arrearages upon the account could be sent to prison by the testimony of the auditor.’”). This early practice of literally “hearing the accounts” was based on the limited ability to read and write among the general population and led to the use of the term “auditor” in the first place. See id.
112 See Edwards, supra note 27, at 32–33.
113 Littleton, supra note 22, at 263. “Futit” signified “footed,” as in the modern practice of referring to tabulations as “footings.”
114 Id. at 263–64.
115 See William A. Gregory, The Law of Agency and Partnership §§ 65–74 (3d ed. 2001) (explaining the duties of agents).
116 This connection between feudal audits and the statutory audit provisions is suggested by A.C. Littleton. See Littleton, supra note 22, at 288–90.
117 The rule in the Joint Stock Companies Act of 1844. See 7 & 8 Vict., c. 110, § 38 (Eng.). The 1845 Companies Clauses Act further specifies that such auditors must hold at least one share in the company, but otherwise they must have no other interest in it (for example, as officers or directors). See 8 & 9 Vict., c. 16, § 102 (Eng.).
118 See Companies Clauses Act, 1845, 8 & 9 Vict., c. 16, § 102; Joint Stock Companies Act, 1844, 7 & 8 Vict., c. 110, § 38.
119 See 8 & 9 Vict., c. 16, § 108.
120 Littleton, supra note 22, at 289 (“Within a few months [the Joint Stock Companies Act of 1844] was revised and repassed as ‘the companies clauses consolidation act’ of 1845.”).
121 See Carey, supra note 23, at 17. John L. Carey’s debt to, and reliance on, A.C. Littleton is acknowledged clearly at the outset of the chapter in which the error occurs. Id. at 13.
122 Littleton, supra note 22, at 293 (alteration in original) (quoting in unnumbered footnote Company Clauses Act, 1845, 8 & 9 Vict., c. 16, § 102; The Companies Act, 1862, 25 & 26 Vict. c. 89, tbl.A, § 86 (Eng.); and The Companies Act, 1908, 8 Edw. 7, c. 12, § 112 (Eng.) respectively).
123 This was more clearly the American system that was taking shape just as A.C. Littleton published his book in 1933, but it ignored the historical and cultural context of British audits that A.C. Littleton himself worked so hard to establish. See generally Littleton, supra note 22.
124 See Companies Clauses Act, 1845, 8 & 9 Vict., c. 16 (lacking any mention of repeal or amendment of Joint Stock Companies Act of 1844, as was the custom of other repealing or amending acts in the same era).
125 See Joint Stock Companies Act, 1844, 7 & 8 Vict., c. 110, § 38 (Eng.).
126 Id.
127 Id.
128 Id. at § 43.
129 See id. at § 37. The 1845 Companies Clauses Act has a similar limited right of inspection by shareholders, and further, does not provide for an outside government Registry Office. Of course, a Registry Office is less relevant for statutory companies: because they can only be created by a Parliamentary act, the government is already fully aware of each one that comes into existence. See 8 & 9 Vict., c. 16, §§ 117, 119.
130 The amendment and repeal of the Joint Stock Companies Act of 1844 excepted existing companies registered under it, until they reregistered under the subsequent acts, as well as existing and to be formed insurance companies. See infra note 133.
131 Some amendments were directed only toward the winding-up provisions of the law and will not be recounted here.
132 Act to Amend [the Joint Stock Companies Act of 1844], 10 & 11 Vict., c. 78 (1847) (Eng.). This amending statute did not alter the audit provisions of the Joint Stock Companies Act of 1844.
133 19 & 20 Vict., c. 47 (Eng.). The Joint Stock Companies Act, 1856 also repealed the 1847 amendment. See Act to Amend the Joint Stock Companies Acts, 1856 and 1857, 21 & 22 Vict., c. 60 (1858) (Eng.); [Second] Act to Amend the Joint Stock Companies Act, 1856, 20 & 21 Vict., c. 80 (1857) (Eng.); Act to Amend the Joint Stock Companies Act, 1856, 20 & 21 Vict., c. 14 (1857) (Eng.).
134 See Joint Stock Companies Act, 1856, 19 & 20 Vict., c. 47, § 48.
135 See id. at § 51.
136 See id. at § 23. Similarly, companies now were required only to register initially with the Registry Office and then to submit annual “Register of Shareholders,” but not the balance sheets and reports of the company. See id. at § 17. This is possibly because the specific accounts and reports required in the body of the 1844 statute were now arguably “optional,” depending simply on the regulations that the company had adopted, as discussed below. See infra notes 144–146 and accompanying text.
137 See id. at §§ 49, 51.
138 See id. at tbl.B, ¶ 76.
139 See Joint Stock Companies Act, 1856, 19 & 20 Vict., c. 47, tbl.B, ¶ 76.
140 See id. at tbl.B, ¶¶ 78, 81.
141 See id. at tbl.B, ¶ 83
142 See id.
143 Id. at tbl.B, ¶ 84.
144 See Joint Stock Companies Act, 1856, 19 & 20 Vict. c. 47, § 9.
145 See id.
146 See id. at §§ 33–36.
147 20 & 21 Vict., c. 14 (Eng.).
148 20 & 21 Vict., c. 80 (1857) (Eng.).
149 As a side note, the original Joint Stock Companies Act of 1844 remained in force throughout this period for companies that had been formed under it before repeal, as well as for insurance companies either existing or to be formed. See id. at § 1.
150 See The Joint Stock Companies Amendment Act, 1858, 21 & 22 Vict., c. 60 (Eng.).
151 See The Companies Act, 1862, 25 & 26 Vict., c. 89 (Eng.).
152 See id. at § 4, sched. 3, pt. 1. This Schedule provides an excellent listing of the prior acts amended or repealed by The Companies Act, 1862. Insurance companies were also required to register under and in accordance with the provisions of this law. See id. at § 209.
153 See id. at §§ 56–60.
154 In the various companies acts, there is a certain interchangeability of the terms “member” and “shareholder.”
155 See id. at §§ 25–26, 32.
156 See id. at §§ 50–51, 53–54.
157 See The Companies Act, 1862, 25 & 26 Vict., c. 89, sched. 1, ¶¶ 83–94.
158 See id.
159 See id. at § 29, sched. 2, frm. B.
160 See id. at §§ 29–34, sched. 2, frm. B.
161 Other acts were passed to amend The Companies Act, 1862, directly, but they are of limited relevance here otherwise. See The Companies Act, 1908, 8 Edw. 7, c. 12 (Eng.) (permitting companies incorporated in British possessions to own land); The Companies Act, 1898, 61 & 62 Vict., c. 26 (Eng.) (empowering courts to enforce various provisions of the collected companies acts); The Companies (Winding up) Act, 1893, 56 & 57 Vict., c. 58 (Eng.) (amending further winding up procedures); The Companies (Winding up) Act, 1890, 53 & 54 Vict., c. 63 (Eng.) (specifying winding up procedures); The Companies (Memorandum of Association) Act, 1890, 53 & 54 Vict., c. 62 (Eng.) (allowing companies to modify their memorandum of association, or other incorporating document, by special resolution); The Companies Act, 1886, 49 Vict., c. 23 (Eng.) (providing for liquidation procedures for companies in Scotland); The Companies (Colonial Registers) Act, 1883, 46 & 47 Vict., c. 30 (Eng.) (permitting companies incorporated in British colonies to keep local registers of members); The Companies Act, 1880, 43 Vict., c. 19 (Eng.) (permitting distributions of accumulated capital to shareholders on certain conditions and establishing power of the Registrar of Companies to remove names of defunct companies from the Registry); The Companies Act, 1877, 40 & 41 Vict., c. 26 (Eng.) (clarifying that “capital” includes “paid up capital” and that companies can reduce the same); The Joint Stock Companies Arrangements Act, 1870, 33 & 34 Vict., c. 104 (Eng.) (specifying conditions on winding up arrangements between creditors and shareholders); An Act to Amend The Companies Act, 1862, 30 & 31 Vict., c. 47 (1867) (Eng.) (later known as “The Companies Act, 1867”) (simplifying settlement of company debts to the Crown).
162 2 Chitty’s Statutes of Practical Utility 531 n.(q) (W.H. Aggs ed., 6th ed. 1911).
163 Id.
164 Id. (citing Lord Granard, House of Lords (Mar. 14, 1907)).
165 42 & 43 Vict., c. 76 (Eng.).
166 See id. at § 7.
167 See id. at § 8. Note that this is different from requiring auditors to sign their own reports.
168 53 & 54 Vict., c. 64 (Eng.).
169 Id. at § 3(1)(b). This prescient provision reads as follows:
With respect to every such untrue statement purporting to be a statement by or contained in what purports to be a copy of or extract from a report or valuation of an engineer, valuer, accountant, or other expert, that it fairly represented the statement made by such engineer, valuer, accountant, or other expert, or was a correct and fair copy of or extract from the report or valuation. Provided always, that notwithstanding that such untrue statement fairly represented the statement made by such an engineer, valuer, accountant, or other expert, or was a correct and fair copy of an extract from the report or valuation, such director, person named, promoter, or other person, who authorised the issue of the prospectus or notice as aforesaid, shall be liable to pay compensation as aforesaid if it be proved that he had no reasonable ground to believe that the person making the statement, report, or valuation was competent to make it . . . .
Id.
170 This is the convention set out in the various amending acts themselves. See, e.g., Companies Act, 1900, 63 & 64 Vict., c. 48, § 36 (Eng.).
171 63 & 64 Vict., c. 48.
172 See id. at §§ 21–23.
173 See id. at § 21(3). That is, of course, auditors could only serve as officers of the company by virtue of being auditors; they could not occupy other officer positions.
174 See id. at § 21. The directors can appoint the initial auditors and fill any casual vacancies. In addition, they can set remuneration in the foregoing situations.
175 See id. at § 23.
176 63 & 64 Vict., c. 48, § 23.
177 See id. at § 10(1)(l).
178 See id. at § 12(3). The “statutory meeting” appears akin to the organizational meeting required of most new corporations in U.S. state corporation laws.
179 7 Edw. 7, c. 50, §§ 1–52 (Eng.).
180 See id. at §§ 1–3.
181 See id. at § 19.
182 See id. at § 21.
183 8 Edw. 7, c. 69, §§ 1–296 (Eng.).
184 See id. at § 109.
185 See id. at §§ 112–113.
186 Id. at § 113, ¶¶ 1–4.
187 See id. at § 26, ¶ 3.
188 See Companies (Consolidation) Act, 1908, 8 Edw. 7, c. 69, § 30, ¶ 1 (Eng.).
189 See id. at § 30, ¶ 2.
190 See id. at § 26, ¶ 5 & § 30, ¶ 3.
191 Id. at § 281.
192 See infra notes 311–444 and accompanying text.
193 3 & 4 Geo. 5, c. 25 (Eng.).
194 7 & 8 Geo. 5, c. 28 (Eng.).
195 18 & 19 Geo. 5, c. 45 (Eng.).
196 See 26 Chitty’s Statutes of Practical Utility 553 (Theodore John Sophian ed., 1929).
197 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, sched. IV, pt. II (Eng.). This provision was derived from the Companies Act, 1928. See 18 & 19 Geo. 5, c. 45, § 33. The general provisions for the prospectuses themselves are set out at sections 34 through 38 of the Companies Act, 1928. Id. §§ 33–38.
198 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, sched. IV, pt. II.
199 See id.
200 See id. § 37(1)(d). Accountants are “experts” per section 37(4). Id. § 37(4).
201 See id. §§ 97–98.
202 See id. §§ 108–111.
203 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, §§ 108, 110.
204 See id. § 113.
205 See id. §§ 132–134.
206 See id. § 133.
207 See id. § 126(2).
208 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, § 128(4).
209 See id. § 152. The auditor, as an officer, also might be subjected to the extra penalties for officers acting in default of provisions of the Act. See id. § 365.
210 See id. § 129.
211 See id.
212 See id. § 130.
213 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, §§ 135–136.
214 See id. § 137.
215 See infra notes 216–236 and accompanying text.
216 See 8 & 9 Vict., c. 16 (Eng.); see also 8 Halsbury’s Statutes, supra note 52, at 8.
217 26 & 27 Vict., c. 118 (Eng.).
218 32 & 33 Vict., c. 48 (Eng.).
219 51 & 52 Vict., c. 48 (Eng.).
220 See id. § 1.
221 5 & 6 Geo. 5, c. 44 (Eng.).
222 See 51 & 52 Vict., c. 48, § 1.
223 See Companies Clauses Act, 1845, 8 & 9 Vict., c. 16, § 101 (Eng.). This is more specific than the “appointment of auditors” by “general meeting” in the Companies Acts.
224 See id.
225 See id. § 102.
226 See id. § 103. Of course, this seems a little formalistic, with little practical safeguarding benefit.
227 See id. § 107. And, the directors are obliged to deliver the same to them. See id. at § 106.
228 See 8 & 9 Vict., c. 16, § 108.
229 See id.
230 See id. This is in addition to a Registry of Shareholders, but that registry is not required to be available to shareholders in the same manner. See id. at § 9.
231 See id. § 66.
232 See id. §§ 109–114. This sounds like the old “charge and discharge” system, but with the directors acting as “auditors.”
233 See 8 & 9 Vict., c. 16, §§ 115–119.
234 7 Will. 4 & 1 Vict., c. 73 (Eng.).
235 47 & 48 Vict., c. 56 (Eng.) (granting power to Crown to renew terms of chartered companies).
236 Statute Law (Repeals) Act, 1993, c. 50 (Eng.), available at http://www.hmso.gov.uk/
acts/acts1993/Ukpga_19930050_en_1.htm (last visited Oct. 1, 2004); see also 8 Halsbury’s Statutes, supra note 52, at 8. Even after the repeal of the Chartered Companies Act, 1837, and the Chartered Companies Act, 1884, however, the Queen still retained the power to grant charters of incorporation of limited duration and to extend or renew such charters, or the privileges granted by such, a charter. Statute Law (Repeals) Act, 1993, c. 50, § 11, sched. 2.

237 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23, § 195 (Eng.).
238 See Littleton, supra note 22, at 279–80.
239 See, e.g., supra note 44 (describing New York state statute).
240 See, e.g., Bureau of Corps., U.S. Dep’t of Commerce & Labor, Report of the Commissioner of Corporations 39–40 (1904).
241 See infra notes 311–347 and accompanying text.
242 See infra notes 311–347 and accompanying text.
243 See supra notes 22–42 and accompanying text.
244 See, e.g., Indus. Comm’n, Final Report 645 (1902). In 1902, the federal Industrial Commission stated the following:
It has long been considered a fundamental principle of our Government that the States should retain a considerable proportion of the legal supervision of business. In the main, at the present time, the various civil rights of our citizens, including those rights which come under the law of contracts, are in the hands of the separate States. [A change in this status quo], while it may eventually be necessary, would prove centralizing to a degree to most people unthought of, in connection with our form of government.
Id.
245 See Gary John Previts & Barbara Dubis Merino, A History of Accountancy in the United States: The Cultural Significance of Accounting 33–34 (1998).
246 See id. at 60.
247 See supra notes 22–105 and accompanying text.
248 See supra notes 22–105 and accompanying text.
249 See Previts & Merino, supra note 245, at 66–73, 81–91.
250 See supra notes 85–88 and accompanying text.
251 See Carey, supra note 23, at 45–46.
252 See id. at 36–38. This group is one of the precursors to the AICPA. Ironically, it was largely started by a transplanted English chartered accountant. See id.; see also Am. Inst. of Certified Pub. Accountants, supra note 71.
253 See Carey, supra note 23, at 39–40, 49.
254 See id. at 49–52; see also supra notes 73–81.
255 See Carey, supra note 23, at 49.
256 See id. at 49–52.
257 See id.
258 See id. at 45–46. One leading accountant from the time is quoted as frequently quipping that “[t]he public thinks a public accountant is a bookkeeper out of a job—who drinks.” Id. at 46.
259 See supra notes 68–70 and accompanying text.
260 See Carey, supra note 23, at 57–58, 83–84.
261 See id. at 77; Littleton, supra note 22, at 298. In contrast, British audits rarely were relied upon by third parties as discussed above. See supra notes 106–237 and accompanying text.
262 U.S. Const. amend. XVI.
263 Tariff of 1913 (Underwood Tariff Act), Pub. L. No. 63-16, 38 Stat. 114 (codified as amended in scattered sections of 26 U.S.C.).
264 See Carey, supra note 23, at 67–71.
265 See infra note 316 and accompanying text.
266 Indus. Comm’n, supra note 244, at 649–650 (including recommendations from preliminary report in final report).
267 By “public accounting” Thomas W. Phillips appears simply to mean an “accounting to the public” on the part of the company, not the practice of being a public accountant as described supra notes 91–94 and accompanying text.
268 Indus. Comm’n, supra note 244, at 669.
269 See id.
270 See id. at 670. Thomas W. Phillips does not state explicitly whether these provisions intentionally followed many of the British precedents, nor whether the “auditor” should be an accountant. See id. Likely, he deems this a permissive, rather than mandatory, aspect of the system, as he also provides for “expert accountants” to act as examiners subordinate to the auditor. See id. At the same time, however, the auditor can also play the role of an examiner at the auditor’s own discretion, as discussed below. Id. at 671.
271 Id. at 671.
272 See id.
273 See Indus. Comm’n, supra note 244, at 671.
274 Interestingly, “certified public accountants” were not included—likely because not all states had passed CPA laws by this time.
275 Id.
276 Id. at 672.
277 See id.
278 Id.
279 See Carey, supra note 23, at 57–58.
280 Indus. Comm’n, supra note 244, at 642–43.
281 For a more contemporary account, see Joel Seligman, The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance 42 (3d ed., Aspen Publishers 2003) (1982).
282 See infra notes 464–481 and accompanying text.
283 Carey, supra note 23, at 78.
284 Id. at 77 (quoting Editorial, J. Accountancy, Nov. 1910).
285 See supra notes 223–229 and accompanying text.
286 See id. at 54–55. An editorial in 1907 stated the following:
“Publicity is a safe and conservative remedy for most corporate abuses. The certified public accountant is the authorized agent of publicity. Let popular discussion of this subject proceed until the people shall demand that the affairs of every public-service corporation, of every bank and of every insurance company shall be regularly examined by certified public accountants who are independent of the directors, if not also of the stockholders.”
Id. (quoting Editorial, J. Accountancy, Nov. 1907).
287 See id. at 83–84.
288 Tariff of 1913 (Underwood Tariff Act), Pub. L. No. 63-16, § 2, 38 Stat. 114, 166–81 (codified as amended in scattered sections of 26 U.S.C.).
289 See Carey, supra note 23, at 67–71.
290 See id.
291 See id. at 146.
292 Payne-Aldrich Tariff Act of 1909 (Corporation Tax Act), ch. 6, § 38, 36 Stat. 11, 112–17; see Carey, supra note 23, at 64–67.
293 See Carey, supra note 23, at 215–16.
294 See id. at 216.
295 Id.
296 Id.
297 See supra note 287 and accompanying text.
298 See Carey, supra note 23, at 80–81.
299 Id. at 81–82(quoting Editorial, J. Accountancy, May 1912).
300 See Companies Act, 1929, 19 & 20 Geo. 5, c. 23; supra notes 176, 208 and accompanying text.
301 Carey, supra note 23, at 82–83 (quoting Editorial, J. Accountancy, n.d.).
302 See id. at 144.
303 See id.
304 See id. at 22, 27–30, 33–35.
305 The literature provides a more detailed discussion of reputational intermediaries. See Reinier Kraakman, Corporate Liability Strategies and the Costs of Legal Controls, 93 Yale L.J. 857, 888–98 (1984); Frank Partnoy, Barbarians at the Gatekeepers?: A Proposal for a Modified Strict Liability Regime, 79 Wash. U. L.Q. 491, 491 (2001). See generally Stephen Choi, Market Lessons for Gatekeepers, 92 Nw. U. L. Rev. 916 (1998); John C. Coffee, The Acquiescent Gatekeeper: Reputational Intermediaries, Auditor Independence and the Governance of Accounting (Ctr. for Law & Econ. Studies, Columbia Law Sch., Working Paper No. 191, 2001), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=270944 (date posted May 25, 2001); Ronald J. Gilson, Value Creation by Business Lawyers: Legal Skills and Asset Pricing, 94 Yale L.J. 239 (1984); Reinier Kraakman, Gatekeepers: The Anatomy of a Third-Party Enforcement Strategy, 2 J.L. Econ. & Org. 53 (1986).
306 See B.W. Mayhew et al., The Effect of Accounting Uncertainty and Auditor Reputation on Auditor Objectivity, Auditing: J. Prac. & Theory, Sept. 2001, at 49–70 (documenting that reputational intermediaries act in reputation depleting ways to a degree not predicted by the theory).
307 See Partnoy, supra note 305, at 491.
308 See O’Connor, supra note 14, at 68–69.
309 See Carey, supra note 23, at 145. One respected firm was forced to place a warning note regarding improper use on its reports. See id.
310 See id. at 145–48.
311 See Ribstein, supra note 39, at 91–92.
312 See id.
313 Id. at 78.
314 See Seligman, supra note 281, at 39. Dean Joel Seligman provides a more detailed background on the immediate responses to the 1929 crash, such as the Pecora Investigation. See id. at 18–38; see also Carey, supra note 23, at 167–69 (discussing the Pecora Investigation).
315 See Seligman, supra note 281, at 41. See generally Louis D. Brandeis, Other People’s Money and How the Bankers Use It (Bedford Books of St. Martin’s Press 1933) (1914).
316 Id. at 41–42 (quoting Brandeis, supra note 315, at 89). It is ironic that Louis D. Brandeis is also the author of the seminal work that is commonly acknowledged as the beginnings of the legal right to privacy. See generally Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890).
317 See supra note 286 and accompanying text.
318 The Institute of Accountants in the United States of America is another forerunner of the AICPA.
319 Carey, supra note 23, at 169.
320 See id. at 163–64.
321 Id. at 160. Notably, the Journal of Accountancy is quoted as calling for audits in conjunction with securities offerings still earlier, in 1919. See id. at 145 (citing J. Accountancy, Jan. 1919).
322 Id. at 161 (quoting J. Accountancy, n.d.).
323 Id. (citing J. Accountancy, n.d.). In truth, the Companies Acts do not call for “independent audits,” but rather simply audits done by auditors elected by the shareholders, who may employ professional accountants. A professional accountant could be elected directly as an auditor, and he might have no other interest in the company other than this engagement. But, there was no requirement for this, the only real hallmark of “independence” as we consider it today.
324 Carey, supra note 23, at 161.
325 174 N.E. 441, 442 (N.Y. 1931).
326 See id. at 444
327 Id.
328 Id.
329 See id. at 447.
330 Ultramares, 174 N.E. at 444.
331 Id. The court is not strictly limiting liability for negligence to parties in privity, but rather it is limiting such liability to parties in privity or when a specified third party is so clearly an intended third party beneficiary of the contract, so as to make him essentially a party thereto.
332 Id. at 448.
333 See infra notes 464–489 and accompanying text (repeating theme).
334 See supra notes 91–95 and accompanying text.
335 See supra note 93 and accompanying text.
336 Note that in Ultramares it is management of the client company itself that does much of the fraud and deceit that leads to the defective certificate. 174 N.E. at 442. Thus, the real question that the court is grappling with is to what degree the accountants were complicit in this fraud.
337 See supra notes 106–238 and accompanying text.
338 Seligman, supra note 281, at 19 (quoting Speech of Franklin D. Roosevelt, 1 The Public Papers and Addresses of Franklin D. Roosevelt 653 (1938).
339 See id. at 42–44.
340 See id.
341 See generally Berle & Means, supra note 61.
342 See Seligman, supra note 281, at 44–46.
343 Such a law was “popularly known as a ‘blue sky’ law, since it was intended to check stock swindlers so barefaced they ‘would sell building lots in the blue sky.’” Id. at 44.
344 Id.
345 See id. at 45.
346 See id.
347 Seligman, supra note 281, at 45–46.
348 See id. at 46–47.
349 Id. (quoting William Z. Ripley, Main Street and Wall Street (Harper Bros. 1939) (1927) and statement of Adolph A. Berle, in Rudolph Weissman, The New Wall Street (1939)).
350 See id. at 47.
351 Id. at 48.
352 Seligman, supra note 281, at 48.
353 See id.
354 Id.
355 See id. at 49. This, of course, is in addition to the earlier Progressive Era calls for corporate and securities regulations discussed above, but none of those materialized into concrete bills or actions. See supra notes 260–279 and accompanying text.
356 See Seligman, supra note 281, at 48.
357 Id. at 49.
358 See id. at 50–51.
359 See James M. Landis, The Legislative History of the Securities Act of 1933, 28 Geo. Wash. L. Rev. 29, 30 (1959).
360 See id. at 30–31.
361 73 Cong. Rec. 937 (1933), reprinted inFederal Securities Laws: Legislative History 1933–1982, at 20 (comp. by Sec. Law Comm., Fed. Bar Ass’n, 1983).
362 See H.R. 4314, § 6 (1933), reprinted in 3 Legislative History of Securities Acts, supra note 1, at 13; see also Landis, supra note 359, at 30–31.
363 See Seligman, supra note 281, at 51–57; Landis, supra note 359, at 31–33. For political reasons, the draft was originally subjected merely to “perfecting amendments” by the new drafting team led by Felix Frankfurter, but ultimately even those portions of Huston Thompson’s draft that were originally retained were “happily discarded.” Landis, supra note 359, at 34.
364 See Seligman, supra note 281, at 67–68; Landis, supra note 359, at 41–42.
365 See H.R. 4314, § 6, reprinted in 3 Legislative History of Securities Acts, supra note 1, at 12–15.
366 Id. at 5.
367 See Carey, supra note 23, at 183. The profession itself often had been lumped in with all of the other purported bad actors when the entire financial services industry came under fire in the wake of the 1929 crash.
368 See id. at 184.
369 See id.
370 Id.
371 See id. at 184–85; Landis, supra note 359, at 31.
372 Carey, supra note 23, at 184–85.
373 Id. (quoting Letter from Col. Arthur H. Carter (Mar. 30, 1933)).
374 Hearings, supra note 1, at 56–62 (statement of Col. Arthur H. Carter).
375 Id. at 56–57 (statement of Col. Arthur H. Carter).
376 See supra note 197 and accompanying text.
377 Hearings, supra note 1, at 57 (statement of Col. Arthur H. Carter).
378 See supra note 362 and accompanying text.
379 Hearings, supra note 1, at 57–59 (statement of Col. Arthur H. Carter).
380 See O’Connor, supra note 14, at 64.
381 Hearings, supra note 1, at 59 (statement of Col. Arthur H. Carter).
382 See O’Connor, supra note 14, at 47, 72–73.
383 Hearings, supra note 1, at 57 (statement of Col. Arthur H. Carter).
384 Id. at 59–60 (statement of Col. Arthur H. Carter).
385 Id. at 60 (statement of Col. Arthur H. Carter).
386 In the 1980s, there was a serious debate over the value of mandatory disclosure, but the general consensus appears to have been that, on balance, it enhanced the functioning of capital markets. For a synopsis of this debate, see Marc I. Steinberg, Securities Regulation 297–306 (4th ed. 2004). Recently, a modified form of this debate has arisen with arguments for “issuer choice,” in which companies need only comply with some disclosure system somewhere in the world, not necessarily the U.S. system, even if the company’s stock is sold and/or traded in U.S. capital markets. See generally Stephen J. Choi & Andrew T. Guzman, The Dangerous Extraterritoriality of American Securities Law, 17 Nw. J. Int’l L. & Bus. 207 (1996); Stephen J. Choi & Andrew T. Guzman, Portable Reciprocity: Rethinking the International Reach of Securities Regulation, 71 S. Cal. L. Rev. 903 (1998); Merritt B. Fox, Retaining Mandatory Securities Disclosure: Why Issuer Choice Is Not Investor Empowerment, 85 Va. L. Rev. 1335 (1999); Alan R. Palmiter, Toward Disclosure Choice in Securities Offerings, 1999 Colum. Bus. L. Rev. 1 (1999); Roberta Romano, Empowering Investors: A Market Approach to Securities Regulation, 107 Yale L.J. 2359 (1998).
387 Pub. L. No. 107-204, 116 Stat. 745 (2002) (codified in scattered sections of 11, 15, 18, 28, and 29 U.S.C.A. (West Supp. 2004)).
388 See generally Lawrence A. Cunningham, The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (and It Just Might Work), 35 Conn. L. Rev. 915 (2003).
389 See O’Connor, supra note 14, at 72 n.498.
390 Hearings, supra note 1, at 61–62 (statement of Col. Arthur H. Carter).
391 See supra notes 200–214 and accompanying text.
392 See Hearings, supra note 1, at 62 (statement of Col. Arthur H. Carter).
393 See S. Rep. No. 73-47 (1933) (text of reported bill), reprinted inFederal Securities Laws: Legislative History, supra note 361, at 13–14, 43–44.
394 See id. at 3 (text of accompanying report).
395 See Hearings, supra note 1, at 56–62 (statement of Hon. Huston Thompson).
396 See Seligman, supra note 281, at 57–58; Landis, supra note 359, at 33.
397 See Seligman, supra note 281, at 61; Landis, supra note 359, at 33–34. Dean Seligman suggests that Thomas Corcoran was not brought in so much to draft the legislation, but rather to help lobby it through Congress. See Seligman, supra note 281, at 63. James Landis gives no such indication, although he does mention that the group often met with Thomas Corcoran only at night because “his duties prevented him from giving his full time to this project.” Landis, supra note 359, at 37. Nonetheless, this Article adopts the convention of Dean Seligman to call the group the “Landis-Cohen team.” See Seligman, supra note 281, at 61.
398 See Seligman, supra note 281, at 63; Landis, supra note 359, at 34.
399 Landis, supra note 359, at 34.
400 See Seligman, supra note 281, at 63; Landis, supra note 359, at 34–35. This Article does not purport to give a detailed history of all the provisions of what would become the ’33 Act, but rather mainly focuses on the development of its audit provisions.
401 See Landis, supra note 359, at 34–35.
402 See id. at 34–35 n.11.
403 See id. at 35.
404 Id.
405 Id. at 35 n.12.
406 See Carey, supra note 23, at 182, 191–92.
407 See id. at 192.
408 See Seligman, supra note 281, at 64; Landis, supra note 359, at 36.
409 See Seligman, supra note 281, at 64; Landis, supra note 359, at 37–38.
410 See Seligman, supra note 281, at 64.
411 See id.
412 See id.
413 Id.
414 See id.
415 See Seligman, supra note 281, at 64.
416 Id. at 64–65.
417 See id. at 65.
418 See id.
419 Landis, supra note 359, at 38.
420 Id.
421 Id.
422 See supra notes 138–143 and accompanying text.
423 See supra notes 144–146 and accompanying text.
424 See supra note 166 and accompanying text.
425 See supra note 197.
426 See Seligman, supra note 281, at 65; Landis, supra note 359, at 38–39.
427 See Seligman, supra, note 281, at 65.
428 See Landis, supra note 359, at 39.
429 See id.
430 Seligman, supra note 281, at 65–66; Landis, supra note 359, at 39–40.
431 Landis, supra note 359, at 40–41.
432 See Seligman, supra note 281, at 66; Landis, supra note 359, at 41.
433 Landis, supra note 359, at 41.
434 Id.
435 H.R. Rep. No. 73-85 (1933) (text of reported bill, H.R. 5480), reprinted in 1 Federal Securities Laws: Legislative History 1933–1982, supra note 361, at 36–37. Of course, this went further than the Companies Act, 1929 in two regards: (1) it required both certified balance sheets and profit and loss statements, and (2) it required that those certified statements be filed with the FTC, rather than simply be included in the prospectus. See id.
436 See id. at 16.
437 See supra notes 106–238 and accompanying text.
438 See Seligman, supra note 281, at 67.
439 See id.
440 See id. at 67–68.
441 See id. at 68–69; Landis, supra note 359, at 43.
442 Landis, supra note 359, at 43.
443 See Seligman, supra note 281, at 69; Landis, supra note 359, at 43–45.
444 Landis, supra note 359, at 43–45.
445 Id. Although a provision was added to stay the effectiveness of the amendment’s provisions unless and until there was a presidential proclamation doing so, this apparently never happened. See Seligman, supra note 281, at 70; Landis, supra note 359, at 48–49.
446 See Seligman, supra note 281, at 69–70; Landis, supra note 359, at 45–48, 49.
447 See Seligman, supra note 281, at 73–100; see also Securities Exchange Act of 1934, Pub. L. No. 73-291, 48 Stat. 881 (codified as amended at 15 U.S.C. §§ 78a–78hhh (2000)).
448 See 15 U.S.C. §§ 78a–78hhh.
449 See id.
450 See Seligman, supra note 281, at 94–100.
451 Carey, supra note 23, at 192; Seligman, supra note 281, at 94–100.
452 15 U.S.C. § 77(g).
453 Carey, supra note 23, at 192 (quoting comments of George May).
454 Id. at 193 (quoting James M. Landis, Speech to the New York State Society of Certified Public Accountants (1933)).
455 See Seligman, supra note 281, at 63–65.
456 15 U.S.C. §§ 77k, 77m, 77o.
457 See Seligman, supra note 281, at 20–38.
458 See id. at 76–77, 89–93.
459 See id. at 99–100.
460 See generally 15 U.S.C. §§ 78a–78l (covering Securities Exchanges, SEC Rules of Practice, and Investor Protection). The ’34 Act also created the SEC, which then is to oversee and to enforce both the ’33 Act and the ’34 Act in place of the FTC. Id.
461 See id. §§ 78j–78n. Section 78m of the ’34 Act deals especially with financial reporting. Id. § 78m.
462 See id. § 78m(a)(2) (stating that “such annual reports . . . , certified if required by the rules and regulations of the [SEC] by independent public accountants” (emphasis added)).
463 Regulation 13A, 17 C.F.R. §§ 240.13a-1, -13 (2004).
464 465 U.S. 805, 817–18 (1984).
465 See O’Connor, supra note 14, at 8–10.
466 See id. at 53–70.
467 See id. at 10–23. The codification of these rules is at (1) Regulation S-X, 17 C.F.R. §§ 210.2-01(b)–(c) (2004), and (2) Codification of Financial Reporting Policies §§ 601–602, reprinted in SEC Accounting Rules (CCH) ¶3872, at 3796. The Codification of Financial Reporting Policies is not intended to supplant the rules set forth in Regulation S-X, but is intended instead only to supplement those rules.
468 Pub. L. No. 107-204, 116 Stat. 745 (2002) (codified in scattered sections of 11, 15, 18, 28, and 29 U.S.C.A. (West Supp. 2004)).
469 See 15 U.S.C.A. §§ 78j–78n. Note that section 78m(a)(2) still refers to “independent public accountants.” See id. § 78m(a)(2).
470 Am. Inst. of Certified Pub. Accountants, Code of Professional Conduct, http://www.aicpa.org/about/code/index.htm (last visited Oct. 1, 2004); see also O’Connor, supra note 14, at 24–37.
471 See O’Connor, supra note 14, at 1–3. See generally William W. Bratton, Enron, Sarbanes-Oxley, and Accounting: Rules Versus Principles Versus Rents, 48 Vill. L. Rev. 1023 (2003); John C. Coffee, Jr., Understanding Enron: “It’s About the Gatekeepers, Stupid,” 57 Bus. Law. 1403 (2002); Lawrence A. Cunningham, Sharing Accounting’s Burden: Business Lawyers in Enron’s Dark Shadows, 57 Bus. Law. 1421 (2002).
472 Cunningham, supra note 388, at 918–19, 943–54; see also Bratton, supra note 471, at 1031–32.
473 Lawrence A. Cunningham also suggests that Sarbanes-Oxley was really a way for Congress to appear to be doing something profound in rapid response to the corporate and financial services meltdown after Enron and other scandals, while in fact doing nothing and preserving the status quo until either the crisis subsided or it could figure out the “right” thing to do. Cunningham, supra note 388, at 979–80.
474 See supra notes 22–230 and accompanying text.
475 See supra notes 106–230 and accompanying text. An example is the townspeople checking up on their local municipal treasurer. See supra notes 106–230 and accompanying text.
476 Cf. William W. Bratton, Shareholder Value, Financial Conservatism, and Auditor Independence, 53 Duke L.J. 439, 446--62 (2003) (arguing that even subsets of current shareholders may have different needs and goals regarding audits and financial statement disclosure).
477 See supra notes 239–310 and accompanying text.
478 See supra note 30.
479 See supra notes 58–60 and accompanying text.
480 See O’Connor, supra note 14, at 62–63.
481 See Revision of the Commission’s Auditor Independence Requirements, 17 CFR pts. 210, 240, § III(C)(2)(a)(i) (2001) (codifying Exchange Act Release Nos. 33–7919, 34–43602, 35–27279, IC-24744, IA-1911, and FR-56 (Nov. 21, 2000)), available at http://www.sec.gov/
rules/final/33-7919.htm (last modified Oct. 12, 2001); Arthur Levitt, Renewing the Covenant with Investors, Speech at New York University Center for Law and Business (May 10, 2000), at http://www.sec.gov/news/speech/spch370.htm (last modified May 26, 2000).

482 See O’Connor, supra note 14, at 68–69.
483 See id. at 57–58.
484 See Final Award, Andersen Consulting Bus. Unit Member Firms v. Arthur Andersen Bus. Unit Member Firms & Andersen Worldwide Societe Coop., Int’l Comm. Arb. 4–25 (2000) (No. 9797/CK/AER/ACS) [hereinafter Final Award]; see also Arthur Andersen & Co., A Vision of Grandeur 84, 92–93 (giving a history of Arthur Andersen & Co., published by the firm for its seventy-fifth anniversary).
485 See Arthur Andersen & Co., SEC No-Action Letter, [1990 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 79,484, at 77,457 (June 20, 1990).
486 See Final Award, supra note 484, at 10–14; Arthur Andersen & Co., supra note 484, at 84, 92–93. Of historical note, Harvey Pitt, then of Fried Frank, and later SEC Chairman, signed the no-action letter request for allowance of this convoluted structure—although it is unclear what role he played in creation of the structure. See Arthur Andersen & Co., supra note 485, at 77,457.
487 See Final Award at 4–25, 116--18.
488 See id.
489 See supra note 479.
490 See generally F. Scott Fitzgerald, The Great Gatsby (Chelsea House Publishers 1986) (1925).