The Second Circuit Court of Appeals has ruled that Big Four firm Deloitte is not responsible for failing to spot fraud at a Chinese company where the CEO was embezzling money and misstating results, according to Reuters. While Deloitte had issued a clean audit opinion on the company, there remained a number of red flags indicating fraud that the firm had failed to investigate. This led to charges of securities fraud against the Big Four firm. However, the three-judge panel on the case said that, at most, Deloitte is guilty of negligence. Were the firm to be guilty of securities fraud, it would have needed to demonstrated unreasonable recklessness, according to Reuters.