Further Details on Deloitte’s Lawsuit Against its Former Vice Chairman

Ryan Blitstein of the Huffington Post has an excellent article following up on the complaint filed by Deloitte against Thomas P. Flanagan, a 30-year partner and vice chairman with the firm, alleging insider trading (previously discussed on Securities Docket here and here).

Among the interesting tidbits in Blitstein’s article are the following:

• Flanagan was a major player at Deloitte’s Chicago office, and the subject of a “fawning Q&A” in the Chicago Tribune last spring.
• Flanagan is a former Army infantryman who recently served on the board of the Boys & Girls Clubs of America and is ex-chairman of its Midwest region. (A Boys & Girls Clubs spokeswoman said Flanagan voluntarily resigned on October 31, a day after the organization became aware of the allegations.)
• Flanagan received Deloitte’s Community Impact Award in 2003, according to a Google cache of a page from the firm’s Web site (removed sometime during the past few weeks).
• As an advisory partner, Flanagan could sit in on the audit committees of clients, providing him with “access to information that no one other than the companies’ own executives and directors had — on strategy, profits/losses, mergers/acquisitions, and basically anything you can imagine that companies don’t disclose until they absolutely have to.”
• Flanagan allegedly used that information to engage in options trading with respect to 12 Deloitte clients, including the purchase of stock in a client company’s acquisition target one week before the purchase was announced.

The article also contains the following statement from a Deloitte spokesperson on the matter:

Deloitte unequivocally condemns the actions of this individual, which are unprecedented in our experience. His personal trading activities were in blatant violation of Deloitte’s strict and clearly stated policies for investments by partners and other professional personnel. Further, it appears that he intentionally skirted our system for reporting and tracking investments. We are taking this very seriously and are conducting our own investigation into the matter.

Read the Huffington Post article