Baldoni & Literick, LLP issued an unqualified opinion on the September 30, 1999 financial statements of Service Paper Company, a publicly owned paper products company. Owing both to an increasing market share and to limited capacity. Service Paper filed a registration statement for an initial public offering of class B common shares under the Securities Act of 1933, and engaged Baldoni & Literick to issue a comfort letter for the period between October 1, 1999 and December 15, 1999, the effective date of the registration statement. Following sale of the securities. Service Paper revealed that sales and receivables from transactions arising after October 1 were overstated materially, trading in the securities was suspended, and Baldoni & Literick was named as a defendant in a class action suit which alleged that the firm either intentionally disregarded, or failed to exercise reasonable care to discover, material facts that occurred subsequent to October 15, 1999, the date of the audit report.

Required: 

Discuss Baldoni & Literick's liability for events that occurred between the date of the auditor's report and the effective date of the public offering.