April 6, 2026
As auditor enforcement stalls in the US, investors harmed by fraud are clinching financial payouts and notching courtroom wins in a pair of class action suits that are typically difficult to bring against accounting firms.
Deloitte & Touche LLP agreed in March to finalize one of the largest settlements in an auditor class action case in a decade. The $34 million payout to Scana shareholders wraps up a six-year court fight over Deloitte’s audits for an abandoned nuclear power plant project in South Carolina.
That followed a case in New York where hedge fund investors who questioned the work of auditors sued BDO, now known as BDO USA P.C., after the fund collapsed. The investors were awarded about $9 million in damages via an arbitration panel. A state judge in January upheld the award and the case remains under appeal.
For investors of collapsed companies, gatekeepers like auditors who allegedly failed to do their job offer a source of cash to recover some of their losses. Such private actions also serve as a tool to hold auditors accountable for alleged flaws or outright holes in their work, extracting what can be a steeper financial toll than that normally obtained by regulators.
The courtroom focus comes as regulatory enforcement cases have fallen sharply under the Trump administration. The Public Company Accounting Oversight Board and the Securities and Exchange Commission both brought substantially fewer actions last year against auditors for ethics breaches and other misconduct.
The US audit board and the SEC brought 39 enforcement cases against auditors in 2025, down 33% from the prior year, according to a Brattle Group report.
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Rare Settlement
Deloitte’s relatively rare legal settlement with Scana Corp. investors is the latest fallout from the nuclear power plant project.
Construction of two reactors at V.C. Summer Nuclear Generating Station was years behind schedule, jeopardizing $1.4 billion in tax credits needed to finance the South Carolina project when Scana halted work in 2017.
The failed project led to criminal convictions, and civil litigation, while the SEC brought fraud charges related to bonds sold to finance the project.
Investors accused Deloitte of dismissing a Scana whistleblower who warned that the project was unlikely to meet deadlines and that executives had misled regulators and the public about the project’s progress. The audit firm also allegedly disregarded evidence that appeared to corroborate the whistleblower.
Such auditor cases underscore the “importance of fulfilling its obligations as a gatekeeper,” said Laura Posner, a partner at Cohen Milstein Sellers & Toll PLLC.
Auditors must gather credible evidence to back up their reports on corporate financial statements and not just rely on representations from company managers, Posner said.
Deloitte agreed to settle the case to “avoid the ongoing cost and distraction of extended litigation,” the firm said in statement, adding that it stands behind its audit work.
Settlements don’t necessarily signal any auditor wrongdoing. The cost to keep litigating coupled with the risks auditors might face at trial can make settlements like Deloitte’s a pragmatic option for firms.
Read Investors Give Courts Fresh Look in Bid to Hold Auditors Liable.