Norman Arnoff writes in the NYLJ about professional liability, and concentrates in the SEC,  securities and  FINRA areas.  He writes, in regard to the Madoff proceedings:

"From cases involving the fraud perpetrated by Bernard Madoff upon a series of feeder funds in order to pass investors’ funds into the fictitious accounts of his colossal Ponzi scheme, it is clear that most of our courts have not placed the appropriate responsibility upon the auditors and accountants for the feeder funds. In consequence this has dramatically diminished the ability of investors to pursue a viable recovery source by limiting professional liability insurance coverage as well as diluting an additional dimension of risk avoidance and loss prevention that accompany the underwriting procedures of the professional liability insurers."

"The analysis of the cases shows that the progress in the law will be better achieved by moving away from the formalities of a contractual or quasi-contractual relationship as a way of defining the accountants’ professional liability risk to the more rooted and definitive standards established by the accounting profession itself. Foreseeable risk and the liability that comes with it should be sourced in the authoritative literature where the accounting profession sets its own standard of care…."
 

"Conclusion

The cases and the analysis that they represent are in a dynamic and now uncertain tension. The law legitimately should eliminate the professionals’ liability risk of an indeterminate nature to unidentified groups for an extended series of transactions. Defining the scope of the accountants’ liability by the formality of "privity" and "near privity," however, is not realistic in terms of what we expect and face in our capital markets and from the financial services industry that serves it. Systemic failures such as Madoff’s fraud should now mandate better and more certain protection for ultimate investors.

Nor does creating statutory preemptions that foreclose certain private causes of action and conferring standing only upon the regulators and prosecutors make sense in view of the limitations of resources of government and regulatory authorities. Further review of, and reliance upon, professional standards will provide better answers for both the accounting profession and society to define the parameters of professional liability risk."