Nation’s No. 5 Accounting Firm Ordered to Pay More than $351MM in Punitive Damages
According to the Miami Herald, a jury Tuesday ordered BDO Seidman, the nation’s No. 5 accounting firm, to pay more than $351 million in punitive damages in an accounting malpractice case, bringing BDO’s potential liability in the case to roughly $521 million, an amount CEO Jack Weisbaum said threatens its operations. The accounting malpractice jury found BDO negligent for failing to find massive fraud in its audits of a financial services company. The jury also awarded $170 million in compensatory damages to the Plaintiff, Portugal’s Banco Espirito Santo. The jury decided Monday that BDO Seidman must compensate the bank and provide punitive damages for failing to reveal massive fraud at the bank’s former partner, E.S. Bankest LLC. The same jury found the accounting firm grossly negligent in June. It is essential that in an accounting malpractice lawsuit, the plaintiff prove the defendant’s negligence by proving a violation of a reasonable standard of care. This typically means that if the level of care in the same field of accounting is taken as a standard of care, the defendant must have acted below the standard. For example, if a personal tax accountant fails to timely file a client’s tax return (without getting an extension) he violated the standard of care through his carelessness. However, only a handful of accounting malpractice cases are that simple. Obviously this was not a simple accounting malpractice case and it took four months to try. BDO was defended by attorney Adam Cole at Greenberg Traurig The Bank was represented by Steven Thomas at Sullivan Cromwell’s Los Angeles office.