Come 1995 — in 1995, the auditing profession and the Silicon Valley high-tech companies sold Congress a bill of goods that we needed reform. There was never any real evidence of a litigation explosion. What happened after we did away with aiding and abetting liability, joint and several liability, when the pleading standards were made very, very much more difficult, we started to see a greater number of re-statements of accounting financials, we started to see bigger companies get involved in auditing frauds, because the auditing profession started to feel very free and easy about what they were doing and what they could do to be compliant with the clients.

The result is that despite the fact that there has been an increase in the number of public companies by fifteen percent, there's been an actual decrease in the number of litigations against the accounting firms, statistically. However, the recoveries against accounting firms have

increased in amounts because the PSLRA forced the plaintiff's bar to do more investigation and those cases seem to get more money out of the defendants when there's accounting wrongdoing than the other kinds of cases, by a large margin.

So, what the evidence shows is that the deterrence wasn't great enough, because the standards for suing were tightened and aiding and abetting liability was not restored after the Supreme Court ruled that it didn't exist. It wasn't put into the securities laws. And, there was really no teeth. And, we have all of this disaster in big companies, huge companies, Fortune 500 companies for the first time in our history. Prior to 95, they were fringe companies that were involved in blown audits. Now it's among the biggest, and there's lots of them.

Mr. Mundheim: Now, I'm not sure whether the lesson from that is that you're still able as a litigation bar, as a plaintiff's bar, to impose significant liability on audit firms which ought to at least get some attention, and Jim says yes.

[Laughter]

Mr. Mundheim: Or, whether you would say it's not enough. You need the ability to sue a broader set of people, or under more generous standards.