In December, Accura’s Dispute Resolution Team won a lawsuit concerning auditor’s liability. The lawsuit was brought by a number of investors in a venture company against the company’s former accounting firm. The court dismissed a claim for approx. DKK 18.5m against Accura’s client, the accounting firm.
The lawsuit was based on eight investors who believed they had invested in a venture company under incorrect assumptions. During the trial, the investors argued that they had based their investments in the venture company on a number of valuation reports prepared by the accounting firm in 2016 for the valuation of a non-cash contribution consisting of a portfolio of investments in a number of Danish and foreign start-ups. The investors argued that these valuation reports were grossly overvalued as it later turned out that several of these startups were in fact insolvent and, therefore, without real value. In addition, the investors argued that the accounting firm should at least have revised the valuation of the startups in question in connection with subsequent financial reporting as it should have been clear to the accounting firm that the valuation report from 2016 was incorrect. Therefore, according to the investors, the investments in the venture company had been made at a significant overprice. In other words, the investors felt that they had “paid too much” for their investments in the venture company and that this could have been avoided if the accounting firm had prepared fairer valuation reports. The investors would then have invested in the venture company at a smaller amount or, alternatively, not made any investment at all.
The court dismissed all of the investors’ claims against the accounting firm.
In this connection, the court found that the investors had not met their burden of proving that there was a causal connection between the 2016 valuation reports prepared by the accounting firm, the lack of impairment in subsequent financial reporting and the loss alleged by the investors. In its reasoning, the court emphasised that it had not been proven what price the investors would have been willing to pay for their investments in the venture company if the valuation reports had been different. In addition, it must have been clear to the investors at the time of investment that their investments (in a venture company) were associated with a significant risk. On this basis, the court concluded that neither a loss nor a causal connection between the accounting firm’s valuation reports and the investors’ investments in the venture had been established.
Therefore, the court dismissed all claims against the accounting firm.
Daniel Haue Jakobsson and Adam Tao Michaëlis conducted the case for the accounting firm.
The judgment has been appealed to the high court.