BDO ESOP Lawsuit: Allegations, Dismissal, and Current Status

The BDO ESOP lawsuit is a putative class action filed in January 2025 by employee Tristin Taylor, who alleges that BDO USA’s leadership engineered a $1.3 billion employee stock ownership plan transaction in 2023 that forced the plan to overpay for company stock. A federal judge dismissed the original complaint in August 2025 for lack of standing, but Taylor filed an amended complaint the next month, and the case is now pending before Chief Judge Denise J. Casper in the U.S. District Court for the District of Massachusetts.

The 2023 Transaction Behind the Suit

In July 2023, BDO USA converted from a partnership into a professional corporation, turning roughly 860 partners into employee-shareholders. On August 31, 2023, the firm established a new ESOP and sold it a 42% stake for approximately $1.3 billion.¹ The purchase was funded through a private credit deal with affiliates of Apollo Global Management at a floating rate tied to SOFR plus 6%, which stood at 11.36% as of December 31, 2023.²

CEO Wayne Berson framed the ESOP as a sustainable alternative to bringing in a private equity investor and as a retirement vehicle for BDO’s more than 10,000 employees.³ Partners had to sell about 42% of their shares to the ESOP trust, accept pay cuts, and give up their pensions.⁴ State Street served as the independent trustee for the plan.⁵

Who Sued and Who Was Sued

Taylor, a current BDO employee and ESOP participant with the firm since at least 2019 and 20% vested in his allocated shares, filed the class action on January 17, 2025 (Case No. 1:25-cv-10128). His counsel is Cohen Milstein Sellers and Toll; the defendants, represented by McDermott Will & Emery, include BDO USA, its board, CEO Wayne Berson, and the ESOP trustees.¹⁶

The proposed class covers all participants in the BDO ESOP on or after August 31, 2023, who vested under the plan’s terms, along with their beneficiaries. It excludes the defendants and their families, plan fiduciaries, and BDO officers and directors.⁷

What the Complaint Alleges

The suit brings claims under the Employee Retirement Income Security Act for breaches of fiduciary duty, prohibited transactions, and co-fiduciary liability. Its central theory is that BDO’s leaders used the ESOP as a “captive buyer” for their own shares, causing the plan to pay far more than the stock was worth and leaving it saddled with debt.¹

Inflated Valuation

According to the complaint, BDO’s board relied on inflated revenue figures to set the company’s price. Employees were allegedly pressured to book client prepayments, retainers, and overpayments as immediate revenue rather than treat them as credits to be refunded or applied to future work.⁷ The valuation also allegedly failed to apply a proper minority-interest discount and did not account for documented audit-quality problems that had drawn scrutiny from the Public Company Accounting Oversight Board.⁵

Self-Dealing and Loss of Control

The complaint alleges that BDO executives had a substantial conflict of interest because their personal payouts depended on the price the ESOP paid. Berson, who has led BDO since 2012, is described as a “key architect” of the deal and is individually named.⁷ The board is alleged to have picked a trustee it expected to accept management’s terms rather than negotiate at arm’s length. And despite selling 42% of the company, executives allegedly structured the plan so that they kept control over BDO’s cash flows, strategic direction, and the voting rights attached to all shares the ESOP held. Participants bore the financial risk without gaining governance power.¹

The Debt Load

The ESOP’s Form 5500 filing for the year ending December 31, 2023, disclosed $1.28 billion in liabilities tied to the Apollo financing.⁷ The complaint calls the 11.36% rate unreasonably high and argues the debt service reduces BDO’s future cash flows. By late 2025, Bloomberg reported that BDO had laid off dozens of employees across audit, tax, and advisory and halted non-essential travel to manage the Apollo debt.⁸

Why the First Complaint Was Dismissed

On August 21, 2025, Judge Richard G. Stearns granted the defendants’ motion to dismiss without prejudice. The ruling turned entirely on standing. The court found that Taylor had not adequately alleged a concrete, particularized injury from the transaction, writing that the complaint “points to no instance in which a tangible loss of value was actually incurred by Taylor.”⁹⁵

The court did not reach the merits of the overvaluation or fiduciary breach claims. It also noted that the complaint lacked plausible allegations that State Street had performed deficiently as trustee or that BDO defendants had improperly influenced State Street’s valuation process.⁵ Because the dismissal was without prejudice, Taylor could refile.

Where the Case Stands Now

Following a joint stipulation, Taylor filed an amended complaint on September 11, 2025. The defendants moved to dismiss the amended complaint on October 10, 2025, with briefing completed on November 21, 2025. Taylor also filed a motion to strike, which the defendants opposed.¹⁰

In December 2025, Judge Stearns recused himself, citing his wife’s financial interest in a company involved in the litigation.¹¹ The case was reassigned to Chief Judge Denise J. Casper, who held a motion hearing on February 18, 2026.¹² As of mid-2026, Judge Casper has not yet ruled on the pending motion to dismiss. The last docket entry was a transcript filing on February 27, 2026.¹⁰

Related Cases From Former Partners

Taylor’s complaint is not the only legal challenge to the ESOP deal, and it draws on filings from two related cases in the Eastern District of Virginia. In BDO USA, P.C. v. Crandell (Case No. 3:2024cv00012), former tax partner Caleb Crandell filed a counterclaim alleging that Berson told partners on a June 2023 call that the corporate conversion was solely to simplify tax filings and denied any private equity transaction was in the works. Crandell alleges BDO had by then been negotiating with Apollo for about 15 months. He also claims he was pressured to inflate revenues before the deal and that leadership manipulated the partnership vote by delaying retirements and reactivating retired partners to secure enough “yes” votes. BDO sued Crandell first, alleging he breached restrictive covenants, and has withheld more than $151,000 from his capital account and earnings.¹³

A second former partner, Phuoc Vin Phan, filed a similar counterclaim after BDO sued him, echoing the revenue inflation allegations and accusing leadership of misleading partners about the deal’s private equity components. Phan alleged that Berson personally collected “many tens of millions of dollars” from the ESOP transaction.¹⁴ Taylor’s complaint cites filings from the Crandell case to support its own revenue manipulation allegations.⁷

1
Cohen Milstein. BDO USA ESOP Litigation
2
Going Concern. BDO Gets Accused of Inflating Revenue Ahead of the ESOP
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CFO Brew. BDO Chose an ESOP as an Alternative to Private Equity Funding
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Consulting.us. BDO USA Arranges $1.3 Billion Debt Deal With Apollo, Launches ESOP
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Garner Ltd. ERISA ESOP Litigation Dismissed: Key Retirement Takeaways
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BV Resources. BVLaw Alert
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Cohen Milstein. Complaint, Taylor v. BDO USA
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Bloomberg. Auditor BDO Cuts Jobs With Focus on Managing Apollo Debt
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NCEO. Court Dismisses Without Prejudice BDO ESOP Case for Lack of Standing
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CourtListener. Taylor v. BDO USA, P.C. Docket
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Law360. Judge Exits ESOP Suit Against BDO Citing His Wife’s Tie
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PACER Monitor. Taylor v. BDO USA, P.C. et al
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Going Concern. Lawsuit Counterclaim by an Ex-Partner Accuses BDO of Shady Behavior Around the ESOP
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Going Concern. Another Explosive BDO Lawsuit Counterclaim Accuses the Firm of Inflating Revenue