BDO US is being sued for $10.7bn by investors claiming the firm ignored signs of potential fraud relating to the Stanford Ponzi scheme.
The complaint was filed at the US Northern District of Texas District Court, Dallas this week by three Texans who lost more than $3.2m on certificates of deposit issued by Stanford’s Antiguan bank.
The investors are seeking $10.7bn in damages that represents the combined claims of all Stanford investors worldwide who lost on the Antiguan certificates of deposit.
In a statement BDO said the firm had yet to be served with the complaint and as such were unable to comment.
However, the firm added: “BDO was never the auditor of Stanford International Bank – the entity where this fraud took place. That very important fact and the timing of this complaint – years after the Stanford fraud came to light and after many other investor complaints were filed – reflects a transparent understanding that these allegations lack merit.”
Investors allege that BDO repeatedly issued unqualified audit opinions on its Stanford client’s annual financial statements as “Stanford’s companies needed unqualified audit opinions to satisfy securities regulators and to continue recommending sales of the allegedly bogus certificates of deposit at Stanford International Bank in Antigua.”
The US Securities and Exchange Commission previously charged Robert Stanford and his companies with securities fraud in the Dallas federal court on 17 February 2009.
Stanford’s companies included Antiguan-based Stanford International Bank, Houston-based broker-dealer and investment adviser Stanford Group Company, and investment adviser Stanford Capital Management.