The SEC’s charges against Deloitte’s former Vice Chairman Tom Flanagan were settled on August 4th. The complaint, filed in a District Court in Chicago where Mr. Flanagan resides, details what the SEC could prove, within a reasonable amount of time. There were many more instances of illegal and unethical activity alleged by Deloitte in their own suit against Flanagan, filed in response to the calls Deloitte received from clients in late 2008 when the SEC started investigating strange trading activity by Flanagan in those audit clients.
The story has been around since late 2008 but the traditional business media stood up and took notice only when the SEC showed their cards. Insider trading by an “accountant” makes good copy. Unfortunately, there were few examples of original or in-depth reporting on the subject now that it was deemed “important”.
The Financial Times’ FT Alphaville and Stacy-Marie Ishmael provided one bright spot. She ties the case together with some other recent scandals and was kind enough to point out my original coverage in November 2008 that broke the story.
Why did Flanagan do it?
Inquiring minds want to know…
Flanagan had access to “market moving” information about earnings, sales figures and an acquisition, the SEC claimed.
As for those Deloitte clients? According to the SEC, they included Best Buy, Motorola, Walgreens and Sears.
Flanagan, 62, spent more than half his life at either Deloitte or its predecessor firms, according to the complaint. So much for company loyalty. Moreover, $430,000 doesn’t seem like much for a senior Deloitte employee, so we have to wonder – why did he do it?
As at pixel time, the Flanagans could not be reached for comment, and Deloitte’s Midwest office did not return calls seeking comment.