A former accounting partner at Deloitte & Touche LLP in the US has pleaded guilty to charges of insider trading in stocks of his corporate clients.
The US Department of Justice said Thomas Flanagan, who worked at Deloitte for 38 years and rose to the position of vice chairman of clients and markets, made $420,000 (£268,000) of illegal profit as a result of the fraud.
The SEC accused Flanagan of violating auditor independence rules 71 times between 2003 and 2008 by trading in securities of nine Deloitte audit clients.
Flanagan illegally bought or sold shares and options in Best Buy, Sears Holdings and Walgreen on whose accounts he was Deloitte's advisory partner, and Motorola where he was on a non-audit engagement team.
The trades were based on advance knowledge of quarterly results for Best Buy, Sears and Walgreen; a 2007 acquisition by Walgreen of a pharmacy services company, and a cost-cutting plan and weak mobile phone sales report for Motorola.
They took place between December 2006 and May 2008 in accounts Flanagan controlled and in the names of his wife and two sons. He also gave tips to a family member who made at least $58,000 (£37,000) of illegal profit, according to prosecutors.
In the US, Deloitte spokesman Jonathan Gandal said the firm 'unequivocally condemns' Flanagan's actions and sued him in 2008 for breach of fiduciary duty, breach of contract and fraud.
In August 2010, Flanagan agreed to pay $1.05m (£670,000) and his son Patrick agreed to pay about $123,000 (£78,000) to settle a US Securities and Exchange Commission (SEC) civil insider trading case. Neither admitted wrongdoing.
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