SEC Litigation Release - Former Deloitte Partner Pleads Guily to Insider Trading

The SEC announced that, on August 8, 2012, Thomas P. Flanagan, a former Deloitte and Touche LLP partner, pleaded guilty to one count of criminal securities fraud for engaging in insider trading after he obtained material, nonpublic information about several Deloitte clients. Flanagan used that information himself and shared it with a relative to make illegal trading profits; the information concerned market-moving events such as earnings results, earnings guidance, and acquisitions.

The SEC also instituted related administrative and cease-and-desist proceedings on August 4, 2010, which found that Flanagan caused and willfully aided and abetted Deloitte's violations of the SEC's auditor independence rules under Regulation S-X and also caused and willfully aided and abetted the companies' violations of the reporting and proxy provisions of the Exchange Act. As alleged in the SEC's complaint, Thomas Flanagan concealed his trades in the securities of Deloitte's clients and circumvented Deloitte's independence controls. According to the complaint, he failed to report the prohibited trades to Deloitte, lied to Deloitte about his compliance with its independence policies, and provided false information to Deloitte's personal income tax preparers about the identity of the companies whose securities he traded.

Cross Reference(s): Exchange Act Sections 10(b), 13(a), 14(a) and 14(e); Exchange Act Rules 10b-5, 13a-1, 13a-13, 14a-3 and 14e-3; Rule 2-02(b)(1) of Regulation S-X.

View release in full here (links externally to SEC website).