On Wednesday, Delaware Chancery Court Vice Chancellor John Noble ruled that Deloitte & Touche LLP can proceed with efforts to recover compensation from Thomas Flanagan, a former audit partner it accuses of improperly trading in client stocks. According to Reuters, Deloitte alleges that Flanagan, who was at one time vice chairman of the firm, is liable for breach of fiduciary duty and breach of contract because he secretly traded in shares of Deloitte’s audit clients and lied about it to the firm.
Flanagan’s lawyers had asked the court to dismiss Deloitte’s claims against him, arguing that some compensation was protected by the U.S. Employee Retirement Income Security Act (ERISA) and that Deloitte failed to state an actual claim of damages. The court, however, denied this request.
As previously discussed here, Deloitte alleges that between January 2005 and 2008, Flanagan engaged in numerous trades of put and call options with respect to securities of at least 12 of Deloitte’s audit clients, for seven of which he was Deloitte’s advisory partner. Reuters reports that the SEC has investigated the matter, as well.
