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Financial Services & Capital Markets| Client Successes

Negligent Misrepresentation Proven in Financial Audit

Situation

Litex Industries had acquired all outstanding shares of Craftmade International, relying upon financial statements reviewed and independently audited by accounting firm BDO USA. After closing, Litex discovered that Craftmade’s inventory was overstated by $1.771 million. Litex sued BDO for negligent misrepresentation based on material errors made in Craftmade’s audited financial statements.

Result

After a three-day trial, our attorneys secured a $1.45 million jury verdict for Litex. The jury found BDO was 100 percent liable for negligent misrepresentation and did not place any liability on Craftmade.