Auditors’ defence challenged

A New York Appeals court case involving AIG and auditors PwC will test whether auditors can use “in pari delicto” – in equal fault – to reject claims for frauds committed by company insiders, The FT reports.

This currently prevents shareholders suing auditors for failing spot internal fraud. If the defence is blown away, all auditors could face increased litigation and more claims on their professional indemnity insurance.