Investors have long been restricted in suing accountants for financial fraud. While global brands such as Price-WaterhouseCoopers, KPMG International, Deloitte Touche Tohmatsu, and Ernst & Young may have deep pockets, with combined revenue of $103 billion last year, they limit legal exposure by setting themselves up as a network of independent member firms linked by a central administrative office. Thatrnmeans heavy penalties in one market can't bring down the whole organization because assets are in the hands of each affiliate. Now two pending lawsuits threaten to make the global firms liable for botched audits in any part of their operations.rnIf successful, the suits could vastly expand the amount of money available for damages in lawsuits over audits. On Jan. 27, New York Federal District Judge Lewis A. Kaplan said he will allow a jury to consider whether Deloitte as a whole is liable for alleged accounting malpractice by its Italian operation in the 2003 collapse of milk producer Parmalat. And on Feb. 17, a state court jury in Miami is scheduled to consider whether Brussels-based BDO International should help pay a $521 million verdict against U. S. -based BDO Seid-man for its audit of a now- defunct Miami company called E.S. Bankest.
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