Supreme Court limits RICO liability for accountants and outside professionals

In Reves v. Ernst & Young (1993), the US Supreme Court ruled that the Racketeer Influenced and Corrupt Organization Act (RICO) may not be used to sue accountants who allegedly commit fraud for a business client if they did not assist in operating or managing the business. RICO prohibits any person from, among other things, conducting the affairs of an enterprise through a pattern of racketeering activity. The Court concluded that "conducting" consists of more that participating and requires an element of direction. An independent public accounting firm in its role as an auditor merely expresses an opinion of the client's financial statement and does not participate in the conduct of the affairs of the client.