In what amounts to a HUGE win for BDO, the Florida 3rd District Court of Appeal in Miami has ordered a new trial in the case between BDO and Banco Espirito Santo:
A Florida appeals court has thrown out a $521 million jury verdict and ordered a new trial in a dispute over audits between accounting firm BDO Seidman and a major Portuguese bank.
The Third District Court of Appeal in Miami ruled Wednesday that the 2007 trial was wrongly divided into three phases.
That meant jurors decided BDO Seidman should pay punitive damages too early in the case.
BDO Seidman was sued by Portugal’s Banco Espirito Sant med on a Miami company later exposed as a huge fraud. The bank claimed BDO Seidman was negligent for not detecting the fraud, costing the bank $170 million in losses.
Jurors awarded the bank $170 million in losses plus $351 million in punitive damages.
We reached out to the Steven Thomas, lead counsel for the Banco Espirito for his reaction:
This case has been sent back for another trial because of the procedural ‘bifurcation’ issue. We are pleased that the effort and hard work the jury put into this case was recognized by the appellate court, and we specifically note that the Court did not dispute BDO unethical conflicts of interest or its negligence. The evidence of BDO Seidman’s failures of even the most basic auditing procedures is so overwhelming that we expect a new jury will reach the same conclusion as the original jury. We look forward to trying this case and reminding everyone of BDO Seidman’s neglect of its public duty and the enormous conflict of interest they had.
Despite the overwhelming evidence, undisputed negligence cited by Mr Thomas, the mood inside BDO is one of vindication. From the firm’s press release not yet posted on the firm’s website:
The firm is pleased to announce that the Third District Court of Appeal of the state of Florida has unanimously overturned a 2007 jury verdict against the firm and ordered that the Bankest case be retried in the 11th Circuit Court. The Court of Appeal concluded that:
• The Trial Court erred in its original decision to trifurcate the trial, ruling that it was prejudicial to have allowed the case to be presented in three phases. This made it possible for the jury to find BDO grossly negligent without, at the same time, considering the conduct of other actors, including representatives of Banco Espirito Santo.
• The Appellate Court further concluded that the evidence of reliance on BDO’s audit opinions was insufficient to sustain the claims of the Bankest investors, save for the one individual who testified at trial.
• The Trial Court improperly allowed into evidence prejudicial hearsay testimony and documents that further served to deprive BDO of a fair trial.
The Appellate Court concluded, “We have carefully considered every substantive and procedural authority that might be applied to preserve at least some of the jury’s findings. In this case, no such balm is found.”
“We are very pleased that the Appeals court has reversed the lower court verdict. We have consistently stated that we were confident that the jury’s erroneous verdict in this case would be reversed on appeal. The addition of punitive damages at the time only served to emphasize the injustice that took place at the trial court,” said CEO Jack Weisbaum. “A new trial will be in accordance with the Court of Appeal’s decision and we will prove that BDO acted at all times consistent with its professional obligations and that its audit opinions were based on the proper application of generally accepted auditing standards.”
So we’ve got a new trial with a re-energized BDO and a tenacious plaintiff. It sounds like BDO will stick with its defense strategy of “we did no wrong,” so this should be fun.
To please you hair-splitters, that number includes principals. E&Y also named 62 new executive directors and 19 new directors.
It’s been a couple weeks since the announcement but we finally were able to run down a few details on the new partners at E&Y:
We’re not sure why Howe had to slip in the diversity soundbite there but he did. Thoughts?
In terms of the breakdown, right now we only have a few specifics so far out of the Northeast:
Of the offices in NY, MA, CT, RI, and NJ, we had a total of 16 new execs: nine tax, four advisory, and a whopping three assurance.
If you’ve got more details, let us know. Congrats to the new PPEDDs at E&Y!
[caption id="attachment_12392" align="alignright" width="260" caption="83 pairs of undies just like ours!"][/caption]
Is it a complete coincidence that it’s National Donut Day?
Besides complimentary undies any thoughts as to what comes in the gift bags? We called Pricew�������������������� folks to find out but so far there’s no word.
But we did hear there’s a little party going down at 300 Madison circa now to introduce the new partners. If there are tears, fist fights, or old partners icing new partners, get in touch with the details (and pics).
First a word from TPTB:
It is with great pleasure that I share the names of the 83 individuals who are being admitted into the PwC partnership as a result of our internal admissions process on July 1, 2010, along with the names of the partners who are retiring from the firm on June 30.
The level of talent in this year’s class of new partners is tremendous and gives me great confidence in our ability to create value for our clients and continue to invest in and develop our people in even more meaningful ways. For those of you who know some of these outstanding professionals personally, you know that they are on this list for good reason. While they have individual talents, skills and experiences, they all share certain qualities. These include a passion for serving clients, a relentless focus on quality, a talent for coaching and mentoring, and the ability to add value to every interaction among our various stakeholders — all while helping grow our business and leading our firm into the future. In addition to their cumulative credentials, two-thirds have worked in more than one office, about a third have changed roles or line of service, and close to a third have done an international tour or have spent significant time overseas. These statistics emphasize that high performers are open to change and willingly step out of their comfort zones.
At this time of the year, we not only say congratulations to our new partner class, but we also say thanks to those moving from being an active partner to a retired partner. This group of partners has collectively contributed to the success and overall brand of our firm. It’s difficult to acknowledge them as a group, as each of these partners has made unique contributions and leaves behind a distinct legacy. I’m proud to say I know many of them personally, and I have learned a great deal from them. Many have been excellent at serving our clients and have been exceptional coaches, mentors and role models for our future leaders. Overall, during their careers at PwC they have made a noticeable difference — for our clients, for our people, for our communities, and for one another.
Refreshing our partnership with new talent each year is one way we continue to drive innovation and a fresh perspective on our business. I think it’s appropriate to celebrate the contributions and legacy of our retiring partners as we welcome a new class of partners to take that legacy and shape it into something inspiring and new. Please join me in wishing our retiring colleagues and friends much success and happiness as they begin the next phase in their journey, and in celebrating our new partners and wishing them ongoing success as they help support the firm’s goal of being the #1 professional services firm!
Here’s a brief breakdown by service:
Assurance – 32
Tax – 40
Advisory – 11
And by city:
Denver – 1; Philly – 3; Houston – 7; Moscow – 1; DC Metro – 4; Florham Park – 6; Minneapolis – 2; Detroit – 3; Hartford – 2; Boston – 5; NYC – 12; Chicago – 7; Tokyo – 3; St. Louis – 1; Baltimore – 1; Indy – 1; Columbus – 1; Pittsburgh – 1; Raleigh – 1; Cleveland – 1; San Jose – 6; Atlanta – 3; Stamford – 2; San Fran – 2; L.A. – 1; Dallas – 3; San Juan – 1; Washington, DC – 1
Congrats to all the new partners!