BDO USA, the U.S. accounting and advisory firm, is defending several active lawsuits. The most prominent BDO USA lawsuit is a proposed ERISA class action over the firm’s 2023 employee stock ownership plan, but the firm also faces audit-negligence claims tied to the collapse of Platinum Partners and First Brands Corp., recently ended securities litigation involving its AmTrust Financial audit, and an older EEOC investigation into discrimination allegations.
Taylor v. BDO USA: The ESOP Class Action
On August 31, 2023, a newly created BDO USA Employee Stock Ownership Plan bought 42% of the firm’s common stock from executives and principals for roughly $1.3 billion. The purchase was financed through a private credit arrangement with Apollo Global Management affiliates at an interest rate of 11.36% as of the end of 2023. More than 10,000 BDO employees became plan participants.
Employee Tristin Taylor filed a proposed class action on January 17, 2025 in the U.S. District Court for the District of Massachusetts. The case, Taylor v. BDO USA, P.C. (No. 1:25-cv-10128), names BDO USA, its board, CEO Wayne Berson, and six ESOP trustees. Cohen Milstein Sellers & Toll represents the plaintiff.
What the Complaint Alleges
The complaint brings claims under the Employee Retirement Income Security Act. Its core allegations:
- BDO executives inflated the firm’s revenues and earnings projections before the sale, including by manipulating client “Credits” (prepayments and overpayments) to boost reported revenue.
- Although the ESOP bought 42% of the company, executives retained voting power over the plan’s shares. The complaint says the price should have carried a 10% to 40% discount for lack of control and marketability.
- Rather than sell to an arm’s-length buyer, executives created a “captive buyer.” The board selected State Street as trustee, a choice the plaintiff says was made in the belief the trustee would “acquiesce to the Board’s will.”
- The board ignored audit-quality problems. A 2022 Public Company Accounting Oversight Board inspection report found deficiencies in 16 of 30 BDO audits reviewed in 2021, a rate near 53%.
- The 11.36% Apollo loan saddled both the firm and the ESOP with $1.3 billion in debt.
The suit seeks restoration of plan losses, personal liability for the defendants, and equitable and injunctive relief.
Where the Case Stands
On August 21, 2025, Judge Richard G. Stearns granted BDO’s motion to dismiss, finding Taylor had not pled a concrete personal financial injury sufficient for constitutional standing. The court also said the complaint lacked “plausible allegations that the independent trustee, State Street, had performed deficiently or that the named BDO defendants had personally and improperly influenced State Street’s valuation.”
The dismissal was without prejudice. Taylor filed an amended complaint on September 11, 2025. BDO moved to dismiss again, and the plaintiff filed an opposition brief on November 7, 2025. The case remains pending. Cohen Milstein has cited Department of Labor filings placing the ESOP purchase price at approximately $1.28 billion and describes participants’ losses as “multimillion-dollar.”
Platinum Partners: Audit Negligence Award Upheld
Investors in Platinum Partners, a now-defunct hedge fund, sued BDO for negligence, breach of contract, and breach of fiduciary duty. They alleged BDO failed to uncover the fund’s overvaluation of assets, particularly an investment known as “Black Elk,” in its 2012 and 2013 audits.
The claims went to arbitration. On July 29, 2024, an arbitration panel found BDO negligent and awarded more than $9 million to a bellwether group of 13 investors. BDO moved to vacate the award in New York State Supreme Court, arguing in part that the investors lacked the necessary legal relationship with the auditor to sue. On January 16, 2026, Justice Andrea Masley denied the motion. She found BDO’s audit reports were addressed to and relied upon by the investors, establishing sufficient “linking conduct” to satisfy New York’s near-privity requirements. The court also upheld the arbitrators’ use of a continuous representation doctrine to toll the statute of limitations for the 2012 audit.
BDO has filed a notice of appeal to the First Department Appellate Division. Claims by approximately 77 additional investors are stayed pending the outcome. CohnReznick, the successor auditor also sued, settled confidentially.
First Brands: Creditor Alleges Missed Red Flags
On April 29, 2026, funds managed by Black Diamond Capital Management sued BDO over its audit work for First Brands Corp., an auto parts supplier that filed for bankruptcy in September 2025. The complaint alleges BDO’s audits failed to comply with generally accepted auditing standards and missed “numerous” risk factors, including the company’s extensive use of factoring and the transfer of “hundreds of millions of dollars” to the personal trust of founder Patrick James.
The suit followed the January 29, 2026 unsealing of a federal indictment charging Patrick James and former senior executive Edward James with conspiracy to commit wire fraud and bank fraud, conspiracy to commit money laundering, and multiple counts of wire fraud and bank fraud. Prosecutors described a “yearslong fraud” involving fabricated and inflated invoices, double- and triple-pledging of loan collateral, and manipulation of financial statements. At bankruptcy, First Brands reported roughly $5 billion in annual sales, more than $9 billion in liabilities, and only $12 million in cash. A cooperating witness, Peter Andrew Brumbergs, pleaded guilty to related charges days before the indictment was unsealed.
The federal indictment does not mention BDO. The Black Diamond suit is in its earliest stages.
AmTrust Financial: Certiorari Denied
AmTrust Financial Services restated five years of financial results in 2017 over improper revenue recognition and accounting for employee bonuses. Investors sued BDO under federal securities laws, alleging the firm falsely certified that its 2013 audit was conducted in accordance with PCAOB standards. After news of the audit investigations, AmTrust’s stock fell 18.9%.
The SEC had already found “egregious and repeated improper professional conduct” by BDO personnel in a 2018 enforcement action, concluding that BDO issued its 2013 opinion before completing the audit, that supervisors pre-dated blank or incomplete work papers, and that the firm failed to review thousands of work papers before authorizing the opinion. Three supervisors were suspended for three years.
In October 2024, the Second Circuit ruled that a false audit certification can itself be material for securities fraud claims, even without a link to specific errors in the financial statements. The court said the “absence of BDO’s certification would have been significant” to investors. BDO petitioned the U.S. Supreme Court for review; the Court denied certiorari on October 6, 2025, leaving the Second Circuit ruling in place. The decision preserves a defense for auditors who held a reasonable belief that their work met PCAOB standards at the time.
EEOC Investigation: Discrimination Charge and Privilege Fight
In 2014, Hang Bower, BDO’s former Chief Human Resources Officer, filed an EEOC charge alleging gender discrimination, retaliation, and a hostile work environment under Title VII and the Equal Pay Act. Bower, an Asian-American woman, alleged the firm stripped her of duties, removed her from leadership meetings, and demoted her after she tried to investigate male managers and a male partner accused of discrimination. She also alleged that BDO fired or constructively discharged female employees who complained and discriminated against non-white employees.
During the EEOC’s investigation, BDO refused to produce 278 documents on attorney-client privilege grounds. Bower filed a declaration stating BDO had required her to copy attorneys on routine business emails and label them as prepared “at the request of legal counsel” to create a false appearance of privilege. A magistrate judge initially denied the EEOC’s subpoena enforcement, but in 2017 the Fifth Circuit vacated that ruling. The appellate court found the lower court had used an “overly broad” definition of privilege, that BDO’s privilege log was vague and failed to distinguish legal advice from ordinary business communications, and directed the district court to conduct an in-camera review of the disputed documents.
Amini LLC: BDO Loses on Management Contract Claims
BDO sued former employees represented by Amini LLC in the New York State Supreme Court’s Commercial Division, alleging they had breached management contracts by misusing confidential information from BDO data analytics projects and doing unauthorized side work. Justice Andrea Masley granted summary judgment for the former employees on the confidential-information claims for lack of evidence. She also barred BDO from seeking $800,000 in liquidated damages, ruling BDO had failed to prove actual harm and that liquidated damages clauses cannot function as penalties to generate windfalls. The court denied BDO’s request to claw back the employees’ wages under the “faithless servant” doctrine on the same reasoning.