The WSJ reports that a Florida jury awarded $170 million in actual damages against audit firm BDO Seidman for gross negligence. The plaintiff, a Portuguese bank, alleged that BDO botched its audit of a Miami financial services company, Bankest, by failing to detect Bankest executives’ fraud. The scheme led to Bankest’s bankruptcy, criminal convictions, and (apparently) a big loss to the Portuguese bank, which backed Bankest financially.
The jury found BDO grossly negligent in June. Now it will consider how much, if any, to award in punitive damages. If it assesses the maximum — three times actuals — the price tag for BDO will come to $680 million.
Barry Barnett
