Texas High Court Nixes Funds’ Suit Alleging Faulty Audits by Grant Thornton

Several funds that made unsuccessful investments in Epic Resorts LLC’s bonds may not sue the vacation timeshare operator’s outside accountant, Grant Thornton LLP, for faulty audits, the Texas Supreme Court ruled in a July 2 opinion that considered the contours of auditor liability (Grant Thornton LLP v. Prospect High Income Fund).

Chief Justice Wallace B. Jefferson, writing for the court, said that the “particular investors involved in this case could not have justifiably relied on the audit reports as to purchases made after they knew the corporation was at risk of financial ruin, and they may not substitute ...