Your Naughty Corporate Controller of the Day
Edward Kelly has been suspended from appearing or practicing before the SEC as an accountant because he got caught insider trading. You can read the SEC order from Feb. 16 here. But the blog SEC Actions put together a nice little synopsis of the case against Kelly: Now the agency has brought an insider trading […]
Ex-KPMG Partner’s Broker Probably Won’t Be Doing Any Insider Trading For a While
The last man standing in the KPMG insider trading case (the one not involving Scott London) has finally fallen. From the SEC: Today [Aug. 14], jurors in Atlanta federal court returned a verdict finding New Jersey securities broker Raymond J. Pirrello, Jr. liable for insider trading in advance of three merger and acquisition transactions. Pirrello […]
Ex-KPMG Partner Will Be Giving the SEC a Bag Full of Money
We have an update on one of the members of Caleb’s fantasy KPMG insider trading golf team. From Law360: With a trial looming, a Georgia federal judge has granted approval of the U.S. Securities and Exchange Commission’s settlement with a former KPMG LLP partner accused of tipping off a stockbroker about the upcoming acquisitions of […]
Accountants Behaving Badly: Insider Trading, Poker Player Gone Bad, Sex Toy Assault
Was there a full moon on July 10? Accountants were found to be doing bad things on that day. Ex-Illumina accountant accused of insider trading [CFO] Martha Bustos, a former accountant for Illumina, was charged on July 10 with leaking the biotech company’s quarterly results to a close friend as part of an insider trading […]
Two Internal Auditors Thought They Could Get Away with Insider Trading, LOL
Two internal auditor buddies got a starring role in an SEC litigation release after they were charged with insider trading for monkeying around with secret information about their respective employers. Lloyd Schuman, a former senior internal auditor at Verso Corp., and Dane Janes, an internal auditor with Ashford Hospitality Trust Inc., agreed to pay a […]
Ex-Deloitte New Zealand Partner Is Probably Having Second Thoughts About That Whole Insider Trading Thing
Today’s “former Big 4 partner busted for insider trading” news comes from New Zealand, where Mark Talbot, who worked at Deloitte from 2014 to 2017, will pay the Financial Markets Authority $150,000 and has been barred from acting as a director or manager of a listed business for five years for not being able to […]
eBay’s Former Director of SEC Reporting (and Deloitte Alum) Charged With Insider Trading By SEC
A CPA who once was the director of Securities and Exchange Commission reporting for eBay Inc. was charged with insider trading by the SEC on Sept. 28 for allegedly using insider information ahead of a PayPal Holdings acquisition to make nearly $36,000 in illegal trading profits, according to documents released on Oct. 16. Bryan Long, […]
Another Former KPMG Employee Gets Into Trouble for Insider Trading
You can add Daniel Senn to the list of current and not-so-current KPMG employees and representatives, such as Scott London, Andrei Postrado, Thomas Avent, and Phil Mickelson (but not his KPMG hat), who have either been accused of, or found guilty of, insider trading. Senn, a Klynveldian auditor from 2007 to 2013, was convicted of […]
Former PwC Employee Latest Star of “Auditor Mishandles Sensitive Client Information”
I haven’t been a Big 4 auditor in quite some time, which means I haven’t taken any training on handling sensitive client information in quite some time. However, my keen sense of self-preservation tells me that if I were in possession of sensitive client information, the kind of information about, say, an upcoming acquisition, I […]
Man, This EY Auditor Made Some Bad Choices
Today in consequences of career limiting moves, a former EY auditor settled charges with the SEC that he traded on insider information about a merger of a client that he was staffed on. Now, I know you’re thinking, “Wow, that was dumb.” And yes, that was incredibly bad decision on the part of Nima Hedayati, […]
SEC Accuses KPMG Partner, Two Others With Insider Trading
Thomas Avent, KPMG's Southeast region partner-in-charge of mergers and acquisitions is in a bit of trouble. The Securities and Exchange Commission filed a lawsuit against Avent, his stockbroker Raymond Pirrello and Pirrello's friend, Lawrence Penna of insider trading. The allegations are simple enough: Avent had access to material, non-public information through his KPMG's work of […]
KPMG to Keep Phil Mickelson in Hats for Foreseeable Future
KPMG is standing by their golfing man. In the aftermath of the news that Phil Mickelson was named as a relief defendant in the SEC's civil lawsuit against famed gambler William "Billy" Walters and Dean Foods chairman Thomas Davis, all of Phil's corporate sponsors are hanging in there. Most notably for our purposes, KPMG issued […]
A Thing We Desperately Wish Were Real: A Photo of Phil Mickelson and Ex-KPMG Partner Scott London Yukking It Up
Texas A&M professor Mike Shaub put the idea in our heads and now we can't get it out: Waiting for the photo of Scott London and Phil Mickelson laughing at a firm event in T minus 5, 4, 3…. And it will be totally irrelevant. — Mike Shaub (@mikeshaub) May 19, 2016 Irrelevant or not, […]
Reminder: Don’t Let Inside Information Turn Into a Career Limiting Move
The US Supreme Court has agreed to review an insider trading case involving a man who used his brother-in-law's position as a banker at Citigroup to make more than $1.7 million. The Court's decision could redefine insider trading and could possibly make it more difficult for the SEC to prosecute insider traders who pass information […]
More Quick and Dirty Tips for Your Insider Trading Scheme
Over this long holiday weekend, if you decide to hatch a plan to trade on non-public information here are a few tips to keep the Feds off your tail for a couple of extra weeks1 until your inevitable capture. Your “golf-coded emails” aren’t clever Sean and Robert Stewart are a father-son insider trading duo charged this […]
A Quick and Dirty Guide to Getting Away With Insider Trading
Insider trading: the classic white collar money-making scheme. Do it right, and you’ll amass a fortune. Screw it up, and you’ll wind up stamping out license plates and teaching ethics CPE from behind bars with Scott London. We're here today to tell you how NOT to get caught because who knows, some day you may […]
Third Idiot Charged in Elaborate Post-It Eating Insider Trading Scheme
Do you all remember the Post-It note eating fools the SEC accused of insider trading? Well, now the SEC has charged the alleged "middleman," who was the one the SEC claimed was eating the Post-it notes with insider-y things written on them back in March though they didn't reveal his name at the time. Today's […]
Scott London Talks About Relationships, Rolex Watches and How He Hates that Parking Lot Picture
ICYMI, MarketWatch interviewed Scott London the other day — which I suppose was a good idea since interviews might get a bit more difficult after London heads off to prison to serve his 14 month sentence next month. In the interview, London comes off as approachably remourseful, almost like a grandma apologizing to her heirs […]
The SEC Is On An Insider Trading Losing Streak
The U.S. Securities and Exchange Commission, in a third insider-trading trial defeat in the past year, lost its lawsuit claiming STEC Inc.’s former chief executive officer made $134 million by selling stock before divulging a sales setback to investors. Federal jurors in Santa Ana, California, returned their verdict on the first day of deliberations. The […]
Phil Mickelson (But Not His KPMG Blue Hat) Is Now Embroiled In a Possible Insider Trading Scandal
First the official news of a Rothstein Kass/KPMG merger hits when I'm wandering the wilderness of a Richmond Civil War POW camp on a workout last night and now this. Can you people just keep your scandals to regular work hours? YEESH. We get this from the NYT tonight: The divergent lives of a championship […]
Ex-KPMG Partner Who Gave Insider Tips to His Former Golf Buddy Is Going to Talk About Ethics Before He Goes to Prison
For the low low price of $158, you can sit in on a live video interview with fallen star Scott London, who will be giving insight into the importance of ethics before he heads to prison due to his the ethical deficiency that led him to profit off insider tips he gave to his golf […]
Qualcomm Managers Accused of Insider Trading by SEC Didn’t Even Try to Hide It
When you think insider trading, you think throwaway pre-paid phones, scribbles on napkins, and clandestine meetings under the dark of night. For three Qualcomm sales managers accused yesterday by the SEC, all that was way too much work. From the SEC's press release: The SEC alleges that Derek Cohen, Robert Herman, and Michael Fleischli learned […]
If You’re Engaging in Insider Trading, You Probably Shouldn’t Connect With Your Insider On LinkedIn
Two guys in Australia have been arrested for insider trading, money laundering, corruption and abuse of public office. Australian Federal Police allege the offenses went down between August 2013 and May 2013 to the tune of $7 million AU (about $6.5 million US). How did they get caught? Funny you should ask. An astute foreign […]
Scott London Sentenced to 14 Months in the Can and a $100k Fine
Let this serve as a reminder of what can happen when you meet shady looking dudes in a Starbucks parking lot.
SEC Charges BP Insider With Cleaning Up His Portfolio After the Deepwater Spill
The Securities and Exchange Commission today charged a former 20-year employee of BP p.l.c. and a senior responder during the 2010 Deepwater Horizon oil spill with insider trading in BP securities based on confidential information about the magnitude of the disaster. The price of BP securities fell significantly after the April 20, 2010 explosion on […]
In Other Name Change News, We Will Not Speak of SAC Capital Again
Well, I guess Point72 could be worse. Like New SAC Capital or Point72&. They’ve changed the sign. They’ve changed the email address. And presumably they will soon be giving out new fleece jackets at Point72 Asset Management, the new family office that will trade billions of dollars of Steven A. Cohen’s money and is the […]
Being a Good Husband Means Listening to Your Wife, Except When Insider Trading is Involved
Women everywhere who are convinced men never listen might gain just a small sense of satisfaction out of these two clowns who — despite getting in trouble with the SEC — prove that not all dudes check out once the lady starts talking. “Spouses and other family members may gain access to highly confidential information […]
Idiots Accused of Insider Trading Used Sketchy Post-It Method, Creative Digestion
Insider trading accusations are often boring, routine and totally predictable. But this reads like something out of a poorly-written detective novel, for real: The Securities and Exchange Commission today charged a stockbroker and a managing clerk at a law firm with insider trading around more than a dozen mergers or other corporate transactions for illicit […]
Sorry to Disappoint But Scott London Will Not be Sentenced Today
Attestation Update has the details as well as a clever dig at the GC faithful: Everyone who had been looking forward to a generous serving of popcorn and schadenfreude on Thursday will have to wait another 2 months. That's right. Mark April 21, 2014 on your calendars and keep an eye on Attestation Update just […]
Save the Date: Scott London May Get Sentenced on Thursday
Attestion Update has been on this like the feds on London's nuts: Sentencing is schedule for former KPMG regional audit PIC Scott London on February 27, 2014 regarding his plea agreement admitting insider trading. That’s the latest visible information in the federal system that shows filings. Previous post mentioned on 2/13 that Something in London […]
Actually, Providing For Your Child Isn’t That Cool When You Insider Trade to Do It
For the last time, people, insider trading is not cool. Not ever. It is especially not cool when you use an account belonging to someone who is related to you, either by blood or by the miracle of childbirth. Ask our friend Steven M. Dombrowski in Chicago how that worked out for him, although at […]
The Allscripts Director of Corporate Audit Accused by SEC of Insider Trading Once Worked at Deloitte
Feel free to refer to our earlier post about Steven Dombrowski's trouble with the SEC. So, there wasn't much about our pal Steve in the SEC complaint, but that's what interns are for. I put my kitten to work against Google and she was able to pull up this now-removed LinkedIn profile that tells us […]
Chicago CPA Charged By SEC For Insider Trading on His Wife’s Account
OH MAN. Someone is going to be in the doghouse for quite some time. Let's take a look at what this clown allegedly did: The Securities and Exchange Commission announced that it filed a civil enforcement action against Steven M. Dombrowski, a C.P.A. and formerly Director of Corporate Audit at Allscripts Healthcare Solutions, Inc. ("Allscripts") […]
Per the SEC, Insider Trading Is Not the Right Way to Start a Hedge Fund
Meanwhile, in the land of SEC complaints: The Securities and Exchange Commission today charged a senior portfolio manager at Microsoft Corporation and his friend and business partner with insider trading ahead of company announcements. The SEC alleges that Brian D. Jorgenson, who lives in Lynwood, Wash., obtained confidential information about upcoming company news through his […]
Reminder: Insider Trading Turned Out Badly for Ex-KPMG Partner Scott London
UPDATE: See update below regarding sentencing timing. It's been quite awhile since we've been on the Scott London beat, but something interesting was brought to our attention late last week that's worth sharing. In a court filing from last month, London's attorney Harland Braun laid out the arguments against a Presentence Report by the United States […]
KPMG Can’t Control the Scott Londons of the World, Says Scott London
Scott London pleaded guilty in Los Angeles court earlier today, but prior to his appearance, he gave an interview to the Wall Street Journal where he admitted that after he had given his watch guy/co-conspirator Bryan Shaw material, non-public information about KPMG clients 14 times, the two men decided that their little insider trading scheme […]
Bryan Shaw’s Lawyer Has a Perfectly Good Explanation for His Client’s Guilty Plea in KPMG Insider Trading Case
For once, we have a lawyer who is of very few words: "He pled guilty because he is guilty," [Nathan] Hochman said. "Mr. Shaw, as he's been heard saying, made some incredibly stupid decisions." We can expect a similar explanation from Scott London on May 30. Stay tuned. [LAT]
Ernst & Young Interns Made Fully Aware of Insider Trading’s Pitfalls
With full-time personnel already on notice, E&Y figured any interns not already familiar with insider trading should be made aware that material, non-public information about a client should not be used to trade securities. Nor should you pass it to your golfing buddy, local jeweler, or connection for hard-to-get concert tickets. A tipster sent us […]
Former KPMG Partner’s ex-Golf Buddy/Co-conspirator Pleads Guilty in Insider Trading Case
Bryan Shaw, the man who provided ex-KPMG partner Scott London with Springsteen tickets, discount Rolexes, and black paper bags filled with cash in broad daylight, pleaded guilty to one count of conspiracy to commit securities fraud today.
ICYMI: BDO Picks Up Skechers After…Ya Know
Bravo Delta Oscar has come to Skechers' rescue and will re-audit the two years worth of financial statements that KPMG abandoned after we learned that Scott London spent some of his billable hours counting cards. From henceforth, gaining a client due to a scandal of a notable degree shall be known as "picking up a London." […]
(UPDATE) KPMG, in the Midst of Grief, Is Reminding the Academic Community of Their Business Success and Enthusiastic Employees
The KPMG apology tour continues. Well, maybe it isn't an "apology tour." It's more like, "KPMG: We can explain," tour. Actually, no, it's not that either. It's more of a "KPMG: Can you believe what this guy did?" tour with support from "This is NOT what we stand for." That has been the message to both […]
KPMG Global Chairman Doesn’t Consider a Partner at His Firm Passing Material Non-public Information About Audit Clients to a Golf Buddy to Be All That Newsworthy
I mean, really. The chairman of KPMG has dismissed as a “one-day wonder” the insider trading scandal involving the former head of the firm’s Los Angeles audit practice. Michael Andrew downplayed the global prominence of the controversy involving Scott London, a senior audit partner who has admitted leaking client secrets to a golfing partner who traded […]
Scott London Won’t Be Making Flirty Comments on the Facebook Page of Bryan Shaw’s Wife Anytime Soon
It was nearly two weeks ago when we learned that ex-KPMG partner had dabbled in insider trading of several KPMG clients, including two — Herbalife and Skechers — that were audit clients of London's. It set off quite a firestorm, however when the criminal complaint against London came out, we discovered that the manner in which he and his golf buddy/watch guy Bryan Shaw conducted this little conspiracy was not too sophisticated. Phone calls. Meetings in parking lots. Black paper bags filled with cash. The Boss. It's what you might expect from a couple of middle-aged bros who had plenty of laughs together at the 19th hole.
KPMG Insider: Partners Feel Betrayed By Scott London’s Actions
Ed. note: This post was written exclusively for Going Concern by a KPMG veteran employee that wished to remain anonymous.
Kaption Kontest Friday: Say Kheese!
Via the New York Times, ex-KPMG Partner Scott London (right) leaves court with his attorney, Harland Braun yesterday in Los Angeles.
In Light of Current Events, Ernst & Young Reminds All Personnel That Insider Trading Is a Big No-no
Have you or someone you know considered passing some non-public information to anyone who has access to concert tickets and/or is offering a discount on a timepiece and/or envelopes of cash? If so, the ethics and compliance folks at E&Y are asking that you take few minutes to read this quick refresher: Internal memorandum […]
(UPDATE) Complaint Says Scott London Admitted to Tipping Bryan Shaw About Five KPMG Clients
~ Update below includes details from the criminal complaint, including Springsteen tickets!
From the Journal:
KPMG’s Official Statement Meets Mystery (Bachelor of) Science (in Accounting) Theater
When a giant insider trading turd hits the fan of independence, KPMG spokesman Timothy Connolly is there with a Clorox wipe to sanitize the minds of the American public. Here's what he said. Be careful, it'll probably sting your amygdala. Late last week, we were informed that the partner in charge of KPMG’s audit practice in […]
Despite Entering a ‘War Zone’, the Next Auditor of Herbalife Should Find Solace in All the Fees They’ll Earn
Part of the reason this KPMG resignation is such a conundrum for both Herbalife and Skechers is that the firm withdrew its audits back to 2010. The clean-up crew for each company will have its work cut out, and according to Georgetown professor James Angel, Herbalife's new auditor, especially, will "be walking into a war […]
Lessons From L’affaire Scott London: Don’t Talk About Your Clients While Quoting Caddyshack
I love Peter Henning's suggestion that ex-KPMG partner Scott London was swapping Caddyshack quotes with his golfing buddy. Everyone having few drinks after playing a round inevitably sees someone walk by with a hideous headpiece and says, "When you buy a hat like this I bet you get a free bowl of soup." I think it's a law in Florida that you have to recite that line.
Would You Rather: Have Part II of PCAOB Inspection Report Released or Find Out an Audit Partner Passed Along Inside Information?
Oh, to be a Big 4 firm these days. Yes, billions of dollars flow in from every corner of the world thanks to your professional services, but thanks to the audit practice, there's peril around every corner! The news that former KPMG audit partner Scott London passed along inside information to someone outside the firm […]
Insider Trading Cost Tom Flanagan a Lot More Than 21 Months of Freedom
Late on Friday, word came down that former Deloitte vice chairman Tom Flanagan was sentenced to 21 months in prison for his insider trading activities. People hate it when big shots use their status to trade on information the rest of us don't have access to, but gears grind into dust when people like Flanagan […]
Here Are Two CPAs That Are Perfect Examples of Setting a Bad Example
There are plenty of professional mentors out there for young accountants to look up to. Men and women of intelligence, integrity, work ethic, nice shoes, all that good stuff. After taking a look at this SEC Administrative Release, you can easily conclude that group does NOT include R. Jeffrey Rooks and another anonymous "accounting partner": […]
Former Deloitte Partner Thomas Flanagan Pleads Guilty to Insider Trading
You know, if ol' Tom ends up doing some hard time, I know of someone who might be able to recommend a rigorous exercise regimen that will keep him busy while he's inside: Federal prosecutors recommended a prison term of at least 37 months for Thomas Flanagan, 64. Flanagan was a partner for more than […]
Former Swinging Salzberg Soldier Sentenced to 11 Months in Prison For Insider Trading
Former Salzberg Soldier and San Francisco housewife Annabel McClellan – who we know as the wife of former Deloitte tax partner Arnold McClellan – was sentenced in federal court yesterday to 11 months in prison for lying to a regulatory agency about slipping insider trading tips to her sister and brother-in-law. McClellan pleaded guilty in April to one count of obstructing and due administration of the law after she made false statements to SEC investigators in 2009.
U.S. District Judge William Alsup handed down the sentence. In her plea, McClellan admitted to eavesdropping on hubby’s conversations about corporate transactions and lying under oath to SEC investigators. Prosecutors guesstimate that McClellan’s naughty behavior defrauded British investors of about $3.05 million.
We are unclear at this time if Annabel will resume her business ventures – like the My Nookie app – upon her release from prison. She should certainly have some experience sistering up with strangers by that point, which can only help her swinger aspirations, unless her soon-to-be prison girlfriend insists on monogamy.
San Francisco housewife sentenced for obstructing insider trading probe [SJ Mercury News]
Ex-Ernst & Young Partner’s Former Lover Skirts Jail Time, ‘Ashamed’ for Sleeping Around to Land Insider Trading Tips
Early last year, James Gansman, a former Transaction Services partner was sentenced to a year and a day for securities fraud. This all came about after Gansman met Donna Murdoch on ashleymadison.com which eventually evolved from run-of-the-mill extramarital activities across the tri-state area to Gansman giving Murdoch hot tips on M&A activity. She then picked up Richard Hansen on Ashley Madison, who also gave her a few more tips that were used for monetary gain. All told, it came to about $392k for Murdoch.
Unfortunately, her trading activity got some people’s attention and this particular jig was up. Accordingly, Murdoch flipped on both her boy toys and as luck would have it, that will kept her out of jail. That’s obviously great and all but Murdoch has found the whole situation quite regrettable.
Donna Murdoch, 49, buried her face in her hands and began blubbering after the judge said she wouldn’t be heading off to the pokey. “Your honor, I will carry the shame of all my wrongdoing for the rest of my life,” the heavyset blonde said as her forgiving hubby and three kids watched from the gallery in Manhattan federal court.
It’s a tough, tough situation to be sure. You know what else is a tough situation? Deciding whether or not to sell out the people you were banging for the information so you could stay out of jail:
“It’s been really painful, but I still feel like the decision to cooperate was the right one, given the situation,” Murdoch said yesterday.
Hot tips from hot lips [NYP]
Deloitte Bankrolls Center for Ethical Leadership at Notre Dame
John Veihmeyer can’t be pleased by this.
The Notre Dame/Deloitte Center for Ethical Leadership will focus on advancing ethical leadership in business, including research, thought leadership and the dissemination of ethics-related content to the business community in the United State and around the world, the university announced Monday.
The center is being established with a major gift from Deloitte LLP, a private professional services company, according to the university. The amount of the gift was not disclosed.
Presumably portions of the curriculum will educate students on how to piece together your spouse’s new hobby with insider trading activity.
Former Deloitte Partner’s Wife Faces Prison After Pleading Guilty to Insider Trading
For those not in the know, San Francisco is already an overpriced third world toilet but Pacific Heights is the go-to for wanna-bes, socialities and trust fund babies who can afford the pricey rents and even pricier home values. According to earlier reports, Annabel McClellan fell in the “wanna-be” category, though we aren’t sure if the fact that her husband worked at the Deloitte had anything to do with that.
The Bay Citizen has the latest update in this sordid tale:
A Pacific Heights housewife will be heading to prison after pleading guilty Tuesday to insider trading and obstruction of justice charges.
In her plea agreement, Annabel McClellan says she gleaned confidential information about publicly traded companies by overhearing her husband, Arnold McClellan, then a partner at Deloitte Tax LLC, discussing details of deals he was working on. She then passed the information on to her sister, Miranda Sanders, and brother-in-law, James Sanders, who was involved in a trading business in London, according to the document.
James Sanders made money from the tips, including about £396,851 (about $648,000 at current exchange rates) from information about Getty Images, according to McClellan.
McClellan also says in the agreement that she obstructed justice by lying to the Securities and Exchange Commission about having obtained and passed on the information.
Both Arnold and Annabel McClellan had been named in a civil suit filed in November by the SEC, but Annabel alone faced U.S. criminal charges.
We’re not sure where this puts McClellan’s sex app – My Nookie – but we’re pretty sure she won’t be needing it behind bars; her only sex position in the years ahead will likely be Don’t Drop the Soap, or maybe Reverse Don’t Drop the Soap if she’s feeling particularly randy.
Meanwhile, let this serve as a lesson to partners: keep your trap shut in front of the Mrs., lest she act on anything she overhears you talking about and later get taken down by the authorities for sharing that information with the girlfriends and in-laws.
McClellan will be sentenced on September 20th. She faces a maximum prison sentence of five years and fines of up to $250,000. That’s 83,612 copies of My Nookie (priced at $2.99) if you are playing along at home.
Earlier: Insider Trading Charges Throw a Wrench into Former Deloitte Employee’s Plans for Sexy Mobile App
(UPDATE 2) SEC Charges Deloitte Tax Partner with Insider Trading
~ Update includes clarification of partner’s employment status and statements from accused’s attorneys via MarketWatch.
~ Update at circa 7:20 pm ET includes statement from Deloitte
If you thought all this insider trading fun was just for hedge funds you would be sorely mistaken. Deloitte seems to have another case of a partner who can’t seem to control himself when he gets some insider info. Earlier this year, former Deloitte Vice Chairman Tom Fla > shelled out $1.1 million to settle charges with the SEC.
This time around, it’s still a family affair – husband, wife, wife’s sister and brother-in-law job – and it went overseas:
The Securities and Exchange Commission today charged a former Deloitte Tax LLP partner and his wife with repeatedly leaking confidential merger and acquisition information to family members overseas in a multi-million dollar insider trading scheme.
The SEC alleges that Arnold McClellan and his wife Annabel, who live in San Francisco, provided advance notice of at least seven confidential acquisitions planned by Deloitte’s clients to Annabel’s sister and brother-in-law in London. After receiving the illegal tips, the brother-in-law took financial positions in U.S. companies that were targets of acquisitions by Arnold McClellan’s clients. His subsequent trades were closely timed with telephone calls between Annabel McClellan and her sister, and with in-person visits with the McClellans. Their insider trading reaped illegal profits of approximately $3 million in U.S. dollars, half of which was to be funneled back to Annabel McClellan.
The UK Financial Services Authority (FSA) has announced charges against the two relatives — James and Miranda Sanders of London. The FSA also charged colleagues of James Sanders whom he tipped with the nonpublic information in the course of his work at his London-based derivatives firm. Sanders’s tippees and clients made approximately $20 million in U.S. dollars by trading on the inside information.
So not a bad haul. The kicker is, Annabel was also employed at Deloitte, working in the London, San Jose and San Francisco offices. The McClellans provided information to the Sanders on several companies including Kronos, Inc., aQuantive, Inc. and Getty Images.
The SEC brass gave their standard scolding. First, Enforcement Chief, Robert Khuzami, “The McClellans might have thought that they could conceal their illegal scheme by having close relatives make illegal trades offshore. They were wrong.”
And San Fran Director Marc Fagel, “Deloitte and its clients entrusted Arnold McClellan with highly confidential information. Along with his wife, he abused that trust and used high-placed access to corporate secrets for the couple’s own benefit and their family’s enrichment.”
But the real story here is the second instance of insider trading charges against a Deloitte partner this year. The firm successfully sued Tom Flanagan back in January but you have to wonder if there isn’t some flaw with the firm’s internal oversight. Not long after the Flanagan suit, we reported on the 475 reprimands for internal noncompliance in 2009. Those reprimands did not mention insider trading specifically but over 200 of them were related to independence violations. Pattern? You can weigh in below.
Anyone with any knowledge on this story is invited to get in touch with us.
as it is not clear if there has been any internal repercussions yet. Messages (including voicemail, carrier pigeon and morse code) left with Deloitte have not been returned (see statement below).
UPDATE: McClellan’s attorneys are not amused by the SEC’s little stunt:
Lawyers for Arnold McClellan denied charges Tuesday by the Securities and Exchange Commission that the former Deloitte Tax LLP partner was involved in a big insider trading scheme. “Arnold McClellan denies the SEC’s claims and will vigorously contest them,” Elliot Peters and Christopher Kearney of Keker & Van Nest LLP said in a statement on behalf of McClellan. “He did not trade on insider information, and there will be no evidence that he passed along any confidential information to anyone.” McClellan “had no financial incentive to commit the actions alleged,” the lawyers added. “He is a conscientious, law-abiding professional with a 23-year unblemished track record of client service at Deloitte to prove it. We will see the SEC in court.”
And just to clarify, McClellan is no longer with Deloitte, leaving the firm in June of this year. Deloitte spokesman Jonathan Gandal emailed us the firm statement (see below)
still hasn’t returned our call (busy day, right?) but managed to give a statement to and was quoted by Reuters, saying that he was “shocked and saddened” by the allegations and “If the allegations prove to be true, they would represent serious violations of our strict and regularly communicated confidentiality policies.”
UPDATE 2: Here is the full statement from Deloitte:
“We are shocked and saddened by these allegations against our former tax partner and members of his family. If the allegations prove to be true, they would represent serious violations of our strict and regularly communicated confidentiality policies. Deloitte is committed to safeguarding non-public client information and has cooperated with the SEC throughout its investigation. The SEC does not allege any wrongdoing by Deloitte in this unfortunate matter.”
Accounting News Roundup: GOP Senators Not Caving on Tax Cuts; NY Court of Appeals Hears In Pari Delicto Cases; Convicted Ex-PwC Employee Loses Case to Get MBA Back | 09.14.10
~ Good morning capital market servants. It’s Dan Braddock’s favorite day of the week. Just another reminder that we’ll be on a lighter posting schedule today as TPTB continue to interrogate us about our lack of influence. We’ll pop in from time to time today to make sure everyone is playing nice and be back to a full schedule tomorrow.
A Career in Accounting [WSJ]
“[W]hile jobs dried up during the economic crisis, hiring in accounting wasn’t hit as hard, and cutbacks have created a need for more hiring as the econ my Thompson, the U.S. campus recruiting leader at PricewaterhouseCoopers. She’ll be hiring 3,000 people this year, up from 2,600 last year.”
Does Anyone Really Want to Be an Accountant? A Tailgate Survey [Re:Balance]
Jim Peterson articulates two time-honored traditions: college football and accounting. The former’s popularity is never in question but Jim talked to some young tailgaters that might make you doubt the substantive popularity of the latter.
Senate Republicans firm on tax cuts for rich [Reuters]
“Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.
Taxes have become a flashpoint going into a November 2 election in which Republicans are seeking to wrest control of Congress from the president’s fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.”
AIG Plots End to U.S. Aid [WSJ]
“American International Group Inc. and its government overseers are in talks to speed up an exit plan designed to repay U.S. taxpayers in full while enabling the giant insurer to regain independence, according to people familiar with the matter.
Under the plan, which could commence as early as the first half of 2011, the Treasury Department is likely to convert $49 billion in AIG preferred shares it holds into common shares, a move that could bring the government’s ownership stake in AIG to above 90%, from 79.8% currently, the people familiar said. The common shares would then be gradually sold off to private investors, a move that would reduce U.S. ownership and potentially earn the government a profit if the shares rise in value.”
Auditors Anticipate NY Ruling on Malpractice Exposure [Compliance Week]
“A group of investors in the reinsurance firm American International Group are suing the company’s audit firm, PricewaterhouseCoopers, for failing to detect a long-running bid-rigging and accounting fraud scheme at AIG. PwC won a dismissal of the suit contending AIG shared blame because it was AIG employees who carried out the fraud that PwC failed to identify, a common defense for audit firms against shareholder claims.
The investor group, led by the Teachers Retirement System of Louisiana and the City of New Orleans Employees’ Retirement System, appealed the dismissal and will have their day in the New York Court of Appeals this week. A Delaware appeals court handed the case over to the New York Appeals court, saying ‘a resolution of this appeal depends on significant and unsettled questions of New York law.’ ”
Seeking An Equitable Outcome: NY State Court of Appeals Hears In Pari Delicto Cases [RTA]
Francine McKenna’s take on the case above.
Verizon Finance Chief Joh Killian Announces Plan to Retire After 31 Years [Bloomberg]
Get your résumé in now.
So Then I Guess Accounting Is Mostly Influenced By Middle-Aged White Dudes? [JDA]
“I’m on a roll with offending people lately so let’s just take this all the way and pull the diversity card, specifically when it comes to Accounting Today’s recent list of 100 Most Influential in accounting.
OK so some faces were predictable and totally warranted; soon-to-be-former FASB Chairman Bob Herz (we’re talking about influence in the profession, not sexiest), GASB Chairman Robert Attmore, PwC Chairman Dennis Nally, IRS Commissioner Doug Shulman… you get the idea. No, I mean you really get the idea, as the rest of the list is comprised of middle-aged white guys too except for 13 women and 3 1/2 black men (Barack Obama counts as .5 if we’re looking at this in a strictly statistical way). Yeah, we noticed.”
Convicted Accountant Loses Legal Bid for MBA Degree [BusinessWeek]
“A certified public accountant who hid his conviction for insider trading from his teachers at New York University’s graduate business school wasn’t entitled to the MBA degree that he thought he earned, a judge ruled.
In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course, according to a court ruling.”
Accounting News Roundup: The Problem with American Apparel’s non-CPA CFO; Diversity Still Lags in Accounting; Patrick Byrne Denies Insider Trading Accusations | 08.23.10
Potash says in talks for superior deals [Reuters]
“Potash Corp’s board urged shareholders to reject BHP Billiton’s hostile $39 billion offer and said it was in talks with a number of potential suitors for a superior deal.
Potash Corp, the world’s largest producer of potash based in the Canadian province of Saskatchewan, said superior offers or other alternatives are expected to emerge.
Discussions are on with several of these third parties in order to generate superior offers, the company said in a statement.”
How to Shine in a Skype Interview [FINS ying across the country for a second round of meetings, you may be asked to interview for a job from the comfort of your living room.
While it might sound less stressful to some than an in-person meeting, such an interview can be filled with landmines for job candidates.”
The Problem With a Non-CPA CFO [FEI Financial Reporting Blog]
Francine McKenna guest-posts over at FEI for the second time, this time discussing the American Apparel situation and noting that 31 year-old CFO might be in over his head.
Goldfarb Branham LLP Investigating Shareholder Claims Against American Apparel, Inc. [Business Wire]
Speaking of APP, investigations are starting, “Goldfarb Branham LLP is investigating American Apparel, Inc. (APP 0.75, 0.00, -0.09%) due to allegations that the company may have issued materially inaccurate statements to investors concerning its 2009 financial results and the circumstances surrounding the replacement of American Apparel’s auditor.”
Movement afoot to increase diversity in accounting industry [Pittsburgh Business Times]
“Sam Stephenson, a partner at ParenteBeard LLC, a Downtown-based certified public accounting firm, brings an interesting perspective to the equation as a black man who has worked in the profession for nearly four decades. During his long tenure, he has seen improvements in efforts to recruit and promote women in the profession, but ethnic diversity still lags behind.
‘We need to bring this issue to the attention of individuals who run local and regional firms because they may not be aware that this is a problem,’ said Stephenson, who serves as a member of the Pennsylvania State Board of Accountancy, which enforces the licensing rules for CPAs. ‘A lack of diversity often means missed opportunities to attract talent and clients.’ ”
Preparer Costs Will Increase Some; Taxpayer Costs Will Increase More [Tax Update Blog]
Joe Kristan responds to fellow practitioner/blogger Robert Flach’s question of how the new tax preparer registration will affect costs for consumers more so than tax preparers.
Gays See Complex, Changing Tax Picture [Dow Jones Adviser]
“Gay couples are taking one step forward, one step back when it comes to their tax rights. Not to mention sideways.
The shifting landscape of new rules and initiatives makes it a big challenge to provide same-sex partners with good tax advice.
In Massachusetts, a successful challenge to a federal law denying gays tax breaks that heterosexual couples get could mean progress, but only if it stands up to an expected government appeal.”
Patrick Byrne Refutes Insider Trading Claims [Forbes]
Former Ernst & Young Partner Still Getting Screwed By Mistress He Gave Insider Tips To
Former E&Y partner James Gansman could finally be done paying for all his bad decisions. Web CPA reports that Gansman has settled with the SEC over his insider-trading-for-sex activities. You may recall that Jimbo received (and is currently serving) a one year and a day prison sentence back in February for his efforts.
This settlement with the SEC will set him back $250k but his mistress – who admittedly cheated on him and then testified against him – seems to have gotten a better deal.
The final judgment to which [Donna] Murdoch consented further orders that she is liable for disgorgement of $339,110 together with $64,943.52 in prejudgment interest, but, based on her demonstrated inability to pay, waives payment of disgorgement and prejudgment interest and does not impose a civil penalty.
Murdoch will probably still see some jail time but this just has to burn the Gansman up. Unless he’s found Jesus or something.
Former E&Y Partner Settles Insider Trading Charges for $250,000 [Web CPA]
Ex-Deloitte Partner, Son To Shell Out $1.1 Million to Settle SEC Insider Trading Charges
Last we had heard of Thomas Flanagan, Deloitte had just taken him to the woodshed, successfully suing him for breach of fiduciary duty, fraud, and breach of contract related to Tom’s insider trading activities of Deloitte clients.
Now it’s the SEC’s turn to get in on this sweet action. The Commission charged Flanagan and his son, Patrick Flanagan for insider trading of Deloitte clients including Best Buy, Sears, Walgreens and Motorola.
Why Flanagan, the 38-year veteran of Deloitte and Vice Chairman of Clients and Markets, who thought that in the twilight of his career, the best move would be to engage in some insider trading is still a mystery. Since he was presumably pushing 60, one couldn’t help but wonder if perhaps his memory was going and he just totally spaced the independence thing.
But actually, no. Turns out, Tom Flanagan is just a liar:
According to the SEC’s complaint, Thomas Flanagan concealed his trades in the securities of Deloitte’s clients and circumvented Deloitte’s independence controls. 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.
Flanagan & Son will be paying over $1.1 million in disgorgement and fines for their little stunt. And Robert Khuzhami had a little reminder for anyone else out there that thinks they can get cute, “Flanagan’s insider trading violated one of the most fundamental rules of public accounting. All audit firms should learn from this unfortunate episode and employ vigorous controls designed to ensure compliance with the SEC’s auditor independence rules.”
SEC Charges Former Deloitte Partner and Son With Insider Trading [SEC Press Release]
SEC Complaint Against Thomas Flanagan and Patrick Flanagan [SEC Complaint]
Ex-PwC Associate Sues NYU to Get His MBA Back
So waaaay back in the early to mid Aughts when Ayal Rosenthal was slumming over at 300 Madison, he got a little entrepreneurial (P. Dubs auditors don’t make shit, you know) with his Dad, two brothers and a host of others. They made a little bit of extra dough ($3.7 million) by running an insider trading scheme based on various tips, some of which were related to clients that Ayal worked on at PwC.
By the grace of God, the SEC caught on to the shenanigans and busted the gang in early 2007 (was this the reason they missed Madoff, Stanford?).
For this little stunt, NYU revoked AR’s MBA after the SEC brought the charges against him. He’s now suing the University because, “the university was ‘excessive and unfair,’ and that the proceedings violated his right to a ‘fair and timely hearing’ because NYU took nearly seven months before considering his case in September 2007.”
First of all, if an academic institution gets back to you in seven months, we’d say that’s a pretty decent response time. Second, “unfair” doesn’t work on anyone.
Having said that, we know full well how hard the young lad must have worked to get that MBA, so we’re not surprised that he wants the prestigious degree back.
If NYU really wanted an airtight reason for taking his degree they should have cited his inability to dupe the SEC for less than five years. Open and shut.
NYU sued for revoked MBA [NYP]
Insider Trader Ex-Con Sues NYU For His MBA [TBI]
Ex-Ernst & Young Partner Sentenced to One Year and a Day for Securities Fraud
James Gansman, a former E&Y partner in transaction services, was sentenced to one year and one day in jail on Monday after being convicted on six counts of securities fraud last year.
Gansman had provided his mistress, Donna Murdoch, with tips on mergers that Ernst & Young were advising which she subsequently traded on. Despite the help, Murdoch needed more money and she began an affair with another man who used the tips to make trades.
To add insult to injury, Murdoch ultimately cooperated with investigators and testified against Gansman. She is still awaiting sentencing after pleading guilty to fifteen charges of securities fraud, obstruction of justice, and making false statements.
Beside making bad relationship choices, Gansman’s hot tips were in violation of E&Y’s “written policies and the duty of trust owed to the firm’s clients.” That extra day in prison should give him just enough time to study better decision making.
Ex-Ernst & Young Partner Gansman Sentenced To 1 Year, Day In Prison [WSJ]
The SEC Still Wants a Piece of Mark Cuban
That’s right! Schape and Co. are coming heavy this time bitch. They don’t know who you think you are, Mark Cuban, but you think you can just walk away from avoiding negligible losses to your net worth and get away with it? OH HELL NO.
The Commission is going to continue pursuing your alleged insider trading ass even though they haven’t been able to present a shred of evidence that you promised to sell those shares. No matter, they’ll pull something together.
Oh, and another thing Mr. Man-Child, the Commission won’t be paying your attorney fees. They realize you’re suing out of spite and regardless their hard-on for billionaires in their 50s that wear basketball jerseys, they won’t stand for it.
S.E.C. to Appeal Court Ruling on Mark Cuban [DealBook]
Sometimes, Adultery Happens…and Maybe a Little Insider Trading
Sometimes when two married people decide to get down to some adulterous activity, bad things can happen. Divorce, confused kids, awkward dinner parties. Most people probably don’t count on getting involved with serious insider trading allegations.
Steamy details after the jump
Eventually the two settled into a comfortable day-to-day routine in their respective offices in New York and Philadelphia, staring at the same Yahoo Finance screen. Mr. Gansman led Ms. Murdoch in a guessing game about which deals he was working on, she said.
Lady Hard Up For Cash Whores Self Out For Hot Tips, Help With Subprime Mortgage [DB]
SEC Suit on Billionaire Man-Child Tossed
Nice try losers.
In what has to be an especially shameful blow to the SEC’s confidence, a Dallas judge has tossed the civil-insider trading lawsuit against Mark Cuban.
As much as we would like to see Cuban squirm, the Judge basically told the SEC they got nada. The SEC, re-thinking its career choice, did not immediately return calls for comment.
Judge Dismisses SEC Insider-Trading Case Against Mark Cuban [WSJ]
Review Comments | 12.21.09
• Christmas Gifts for that Special Tax Person – A possible gift for that Tim Geithner groupie in your life. [TaxProf Blog]
• GM Recruits Microsoft’s Liddell as New Finance Chief – Apparently GM’s finance department had some Deliverance thing going on. [Bloomberg]
• Top 50 Blogs for Accountants – There are some familiar names on this list, including GC. Thanks! [The Biz-Learner]
• Rajaratnam, Chiesi Plead Not Guilty – Doing what’s best for investors is not a crime. [WSJ]
• Crazy Eddie inductee talks about walls of false integrity – Sam Antar = Hall of Famer [Con Artist Hall of Infamy]