Trustworthy auditing firm

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Reference no: EM132533129

In 2013, Lion Bank provided Dragon Ltd a term loan of HK$3,000,000 and in return Lion Bank obtained an option to subscribe for 40% of the share capital of Dragon Ltd. It was a condition of the loan agreement that Lion Bank should be provided with annual audited financial statements as soon as they were available. Lion Bank relied on the accounts which were prepared by Trustworthy Auditing firm and subscribed for 40% of the Dragon Ltd's share capital. Later, it was discovered that the accounts prepared by the Trustworthy Auditors included material inaccuracies and as a result, greatly overstated the value of Dragon Ltd's fixed assets and of its profitability. The shares held by Lion Bank became worthless.

Advise Lion Bank as to whether it can sue Trustworthy Auditing firm

Reference no: EM132533129

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