Auditors are not always found guilty of negligence, gross negligence, and fraud when lawsuits are filed against them. and they do not always settle lawsuits to avoid costly, protracted litigation. a good example is legal action taken against three accounting firms in in re advanced battery technologies, incorporated and ruble sanderson v. bagell, josephs, levine & co., llc, friedman llp, and efp rothenberg, llp. for purposes of this case, advanced battery is referred to as abat and the three accounting firms simply as "the auditors." on march 25, 2015, the second circuit and eleventh circuit courts of appeal affirmed dismissals of securities fraud claims filed against the auditors that audited chinese reverse-merger companies because the plaintiffs did not adequately plead scienter under the heightened pleading standard imposed by the private securities litigation reform act of 1995.1 under the pslra, plaintiffs must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind" with respect to each act or omission of the defendant that is alleged to violate the securities laws. the second circuit’s opinion in abat stated that to allege scienter on a recklessness theory against an independent audit firm