Federal Court Rules SOX Privilege Provisions Apply to the Auditor Under PCAOB Inspection

The U.S. District Court for the Western District of Missouri, ruling on a plaintiff’s motion to compel, painted the parameters of privilege for outside auditors responding to inspectors from the Public Company Accounting Oversight Board (Bennett v. Sprint Nextel Corp.).

The issue of privilege stemmed from a class-action alleging securities fraud related to the merger of Sprint and Nextel. The lawsuit specifically points to alleged accounting irregularities by Sprint for the fourth quarter of 2006 and the first three quarters of 2007, including failure to timely write off its impaired goodwill.

The plaintiffs wanted the court to compel ...