Tag: Partners

Which Accounting Firm Has a High-Ranking Partner Whose Hooker Habit Got Him in a Bit of Trouble?

Actually, there might be a few of them but we’re talking about a very specific instance. A partner with a hectic international travel schedule got taken to the cleaners by his wife after she discovered that he was keeping company on the side while on his business trips, including the aforementioned hookers. And as luck would have it, some of the court documents found their way into our inbox. We’ve clipped some of the juicy parts for you:


It should be noted that this particular situation took place a number of years ago and proceedings were still being wrapped up fairly recently. Now, the hookers angle is especially salacious (which we like) but what does a situation like this say about the pressure that many globetrotting partners are under? The firms demand a lot from their top leaders and a lifestyle of high pressure and international travel can wear on a person. If whores on the cheap happen to be in close proximity to your hotel…well, it’s not inconceivable that some partners may want to blow off some steam. Landing an exotic piece of tail to help you cope with the stress while traveling on business may be a lot of fun but if you have a wife and kids and home, that’s where things get can complicated, and in this case expensive, as the following indicates:

And we didn’t even mention the possibility of the spreading around the clap. No one wins there.

How Would You Vote on the Deloitte Leadership Candidates?

Last month, we shared with you the concerns of a Deloitte partner who has a lot of issues with the processes around electing the firm’s leadership. As the partner explained it to us, “The elected individuals are the Chairman, the CEO, and a CEO ‘Alternate.’ The CEO ‘Alternate’ is there in the event that the CEO elect is also elected as the Global CEO (which will typically happen).”

Recently, we were able to confirm the candidates and thought we’d share them with all of you since some of you might not be aware of who they are:


• Punit Renjen, for Chairman of Deloitte LLP (Current CEO of Deloitte Consulting)

• Barry Salzberg, for CEO of Deloitte LLP (Current CEO of Deloitte LLP)

• Joe Echeverria, for CEO Alternate (Current Managing Partner of U.S. Operations)

What’s not immediately known is when Deloitte partners will be voting “Yes or No” on these candidates. One of our sources speculated that the vote could be as early this week.

In our previous post, we learned that the partners vote up or down on these candidates as a group as the partner in our last post explained “The partners get to vote ‘YES or NO’ on the ‘slate’ of candidates that is advanced.” Since we know a lot of you out there in Internetland are Deloitte employees but not partners, we thought we’d get your perspective on this slate of candidates and whether you would give them a “Yes” or “No.” And since the comments box allows for further explanation, feel free to elaborate on your vote. We know of one person who will be voting no.

A message left with Deloitte spokesperson Jonathan Gandal was not immediately returned.

Earlier:
Deloitte Partner Encourages Brethren to Take Back Their Firm

PwC Picks Up Thomas Henry from KPMG; Will Lead Global Incentives Practice

This could be what PwC’s Talent Leader was talking about she said that poaching, “[Has] always been a place we like to stay competitive.”

Mr. Henry, a tax partner who has spent more than 25 years in public accounting, most recently at KPMG, has extensive experience in all areas of state and local taxation. He is best known for his work in the credits and incentives space, both domestically and worldwide. His experience in maximizing global incentives for large multinational corporations in the United States, Europe, Asia and Africa will enable both US-based and non-US-based multinational companies to benefit from his counsel when entering into economic incentives negotiations.

Thomas Henry Joins PwC US To Lead Global Incentives Practice [PR Newswire]

Partner Shows Amazing Restraint After Former Colleague Calls Him a Thief and a Liar

Sometimes when there is a dispute among partners of an accounting firm, things can get a little ugly. Sure there’s the sleeping with the other’s spouse/pool boy problems that crop up from time to time but that’s nothing compared to a situation when there’s actually a business reputation, financial considerations and possible federal criminal charges at stake.

Such is the case involving a former tax director at TCBA Watson Rice LLP with the firm’s managing partner. Patrick Largie tasked with preparing the firm’s 2009 tax return and when he got to the “Other Deductions” (line 20, for those of you scoring at home) he noticed a suspicious $1.8 million figure. After investigating further, he determined the amount was ‘inaccurate and false’ that could possibly bring “an IRS investigation and possible criminal charges.” As a result, he brought it to managing partner Bennie Hadnott’s attention. Hadnott didn’t feel it was anything worth raising a fuss over and demanded that Largie sign the return and go on his merry way.

Largie refused and was promptly fired. And yes, of course he sued. But Bennie Hadnott is treating the lawsuit much like he treated the $1.8 million Other Deductions – it’s NBD:

Hadnott labeled the claims “a nuisance lawsuit” and said the dispute was going into mediation on February 4.

“You get those filed all the time,” he said. “You can’t control what people go out there and do. We filed an answer to that, but there was no merit to it. He got mad because he was terminated with cause. People get emotional and go out there and try to sue the whole world, which he did. You have no control over people going out there and filing actions like that.”

So, despite his former colleague sullying the fine TCBA Watson Rice name and also accusing him of misappropriating $500k through bogus loans, Hadnott won’t have it, is taking the high road even though he could make Largie’s life difficult:

Hadnott hinted that Largie’s lawsuit came in retaliation after the firm learned of his actions and dismissed him, but he declined to elaborate on the firm’s claims. “I can really prosecute him for smearing our name, but we are just trying to be cool about it,” he said. “We don’t want to drag him through the mud.”

Other than the part where you make him look like a perfectionist, litigious, asshole crybaby, his name should be just fine.

Partner Sues Firm over Termination [AT]

PwC Partner Says His Lack of Whiteness Stifled His Pay; Sues Firm

Ahhhhh, the race card. Just when you think it’s maxed out, another swipe is attempted.

Dunstan Pedropillai, is a partner in PwC’s London office who early in his career was labeled ‘a rising star’ and a ‘star performer’ is suing the firm because, he claims, he doesn’t fit in with the ‘collegiate club-like corporate culture.’ Simply put – his lack of whiteness and Britishness is holding him back. But things weren’t always this way, it seems. The firm reportedly went out of their way to admit him as a partner a year early in 1997. Everything was going swell until he returned from Japan in 2001 when all of a sudden his non-pale face, seemingly, started affecting his career:

‘The original culture of the firm is an extremely strong collegiate club-like corporate culture which has its roots in Anglo-Saxon male culture, which is the major composition of the firm.’ Of his return from Japan, he said: ‘It was as if they had already formed a view that I was not a ”member of the club” or that in some way my face did not fit. The firm felt they could not put me in front of blue-chip top tier clients – they felt as a non-white I didn’t look right.’

Of course it was entirely possible that Dunstan was slipping a bit:

By 2003 his rating at the firm had dropped to the bottom level available for a partner. In 2004 he received a bad appraisal for dating a colleague, Marina, now his wife, without revealing the seriousness of the relationship to his boss.

So we all know that dipping your pen in the company ink, while potentially tricky (not to mention common), is NBD and Dunstan was ultimately given a pass on this but still wasn’t satisfied and that’s when decided to threaten the firm with a suit. This was received rather coolly by PwC, who reciprocated with their own threat to fire him if he went ahead with the lawsuit slapping. He called P. Dubs bluff (apparently he still has his job) and now PwC is taking the gloves off, saying that Dunstan just started sucking and he should be thanking his lucky stars that he still has a job and his £933,480 salary:

Suzanne McKie, representing PwC, said the firm denied that Mr Pedropillai’s career stalled because of his ethnicity and put it down to his ‘poor people skills’. She said that the poor global economy meant Mr Pedropillai’s unit grew only marginally, and that two of his white peers were made redundant, while another, who had returned from working abroad at the same time as Mr Pedropillai, had been forced to move to Australia because there was no work for him in London. She said the £100,000, or 12 per cent, pay cut received by Mr Pedropillai last year was roughly in line with the eight per cent salary drop received by partners across the board and that he had a low role grade because he refused to accept any negative feedback.

£1million accountant who blames racism for limiting his pay [Daily Mail]

Blog by Wife of PwC Partner (aka Chief Spending Officer) Details Failed Attempts at More Frugal Lifestyle

Times are still tough for many but few take to the blogosphere to share their tales of coupon clipping, pics from staycations and scouring the racks at Filene’s Basement. One person who felt the need to share her frugal efforts with the masses is Lisa Unwin, the “Austerity Mum” and wife of PwC’s head of consulting in the UK, Ashley Unwin. How tough have things been at Casa de Unwin? Well, it all started when the couple purchased a house in East London that reportedly cost ‘squillions,’ and Ms Unwin thought that maybe a more modest life was in order:

Musing on how to cut the cost of family holidays she suggests forgoing private helicopter flights or cancelling that half-term break in the Maldives in favour of returning to your weekend home in the French Alps.

The closest her family comes to the wartime notion of make do and mend is for the husband to have his designer Berluti shoes resoled – at a specialist cobblers on Bond Street, she reveals.

Now that’s sacrifice! However one thing her “Chief Spending Officer” husband wasn’t able to give up are his handmade shirts:

“Not even Prada is good enough any more, can’t recall why,” she reveals.

Then, there’s the ankle-biters:

[H]er two children – nicknamed the “diva-in-waiting” and the “smallest man with the biggest attitude” – have come to believe it is normal “to have a seat that turns into a bed if you’re on a flight for more than three hours”.

For her part, Ms. Unwin was thinking about going back to work (she’s a former Deloitte communications director) but there were conditions:

Claiming she would “love” to go back to work, she bemoans how the cost of childcare makes it impractical. “It would need to be something that I could do between the hours of 10 and two – well, actually 11 and two three days a week to enable me to go the gym,” she concludes.

Sadly, Ash wasn’t so keen on the attention the blog was getting, “Mr Unwin is understood to be acutely embarrassed by the disclosures and she has now agreed to take down the blog.” Lisa is looking for ‘another way to write’ but our guess is a freelance gig with Going Concern is out of the question. Even still, the offer stands Lisa – email us.

Moss Adams CEO Denies Grant Thornton Merger Rumor in Email to Partners

In reaction to our post yesterday about the rumor of Grant Thornton and Moss Adams being united in wedded CPA firm bliss, Moss Adams Chairman and CEO sent an email to MA partners yesterday afternoon. The email, sent to us earlier today, let the partners know that no one is out of the loop, “[L]et me start by assuring you that you did not miss a partner call, a partner memo or any other such communication dealing with this.”


Mr Anderson also wrote that he has spoken to Grant Thornton, “Since we last had the all partner webinar, there have been no substantive discussions with GT – I say no substantive discussions because I have been at an AICPA major firms meeting where I not only had casual discussions with the GT leadership team, but I had similar discussions with the leadership of most of the 30-50 largest CPA firms in the country, exclusive of the Big 4.”

So you can interpret things like, “no substantive discussions with GT” and “casual discussion with the GT leadership team” how you like but Mr Anderson made himself a little clearer near the end of the email, “I can absolutely assure you that while we have had discussions with a large number of firms (of all sizes) over the past 12 months […] there are currently no negotiations under way with any firm regarding merger. But I can also tell you that I and other [Executive Committee] members will be talking to some west coast firms over the next several weeks.”

Moss Adams has not responded to our most recent request for comment. Grant Thornton sent back our carrier pigeon with it’s head cut off (very Chicago), which is the closest thing resembling a response that we’ve ever received from the firm. We’ll keep you updated.

Deloitte Partner Encourages Brethren to Take Back Their Firm

As previously discussed, making partner at a Big 4 firm is no small feat. It takes years of work, some political savvy and luck. When you finally get a seat at the big table, you discover that everything leading up to that point was simply the beginning. Now that you’re calling the shots, you have big responsibility, be willing to resist temptation, and try to keep employees happy. Not an easy task but that’s why they get paid the big bucks, right?

But forget all that. Partners, as we know, are owners. They have an equity stake in their firm and have a say in how the firm should be run. Or do they have that say? One Deloitte partner, a twenty year veteran of the firm, reached out to us recently to express their concern about the upcoming election of new leadership at the Green Dot:

I’m an audit partner with Deloitte. Don’t want to bore you with the fact that I love the firm, and I am a die-hard D&Ter. But, all firms have their faults, right? Even Deloitte. While we tout and sell “Good Governance” strategies – our own governance process is severely BROKEN.

What many may not know is that Deloitte has an election year happening in 2011. Yes – Sharon Allen is off to retirement [Ed. note: PARTY! – Oh sorry, this is serious], and so is Jim Quigley. No tears for them…they have very rich retirement packages that will keep them wealthy for decades to come.

We’ve already been through our “Nominating Committee” process, where all the partners are able to be interviewed by committee members and submit nominations of individuals that they would like to see in different leadership roles. The elected individuals are the Chairman, the CEO, and a CEO “Alternate.” The CEO “Alternate” is there in the event that the CEO elect is also elected as the Global CEO (which will typically happen).

We’ll jump in here to make a quick point: our tipster reiterated to us that (s)he loves Deloitte and the motivation for reaching out to us is due to his/her commitment to the firm. (S)he even admitted that reaching out to GC seemed odd but clarified it to us this way, “It is akin to someone that loves their country and wants to improve upon it because we know we have the right to speak out and improve our country. Right now, our election process at Deloitte is broken.”

ANYWAY:

The thing that angers many partners – but few voice this concern – is that the Nominating Committee Process and the “election” of the Firm’s leadership is a farce. The “independent” Committee comes up with their recommended candidates after hearing the soundings of the partners. I should add that Committee is selected by the Board and Management. There is no “election” to approve the Committee. Then the Committee comes to a conclusion on ONE set of recommended candidates, and the Board approves that recommendation (shocking). Then, the partners get to vote “YES or NO” on the “slate” of candidates that is advanced. This “election” occurs in late February/early March. The leaders must be installed in June. So what if the partners said NO? What would the leadership team do then?? Guess what – they don’t care! Because they know the partners always say YES! It is so painful. And nobody is willing to challenge this process. Because – you have three camps of partners. (1) the camp that doesn’t care and never will because it “doesn’t affect my daily life; (2) the camp that is so rich in the number of units they have, they wouldn’t upset the apple cart because they make too much money to want to risk it even though they know it is wrong, and (3) the younger partners who fear retribution of having their “heads cut off” for speaking up.

Jumping in again – we spoke to a former Deloitte partner, who confirmed the broad details of the process and also the widely-held notion that the election process is a “farce.” This former partner also confirmed this is a feeling held by many partners, especially the freshly minted ones. In addition to the fear of retribution, he said that younger partners also feel apathetic, being of the mindset that the “nominating committee won’t listen to me” and they are being given “lip service” by leadership. Further, for many young partners, simply joining this exclusive club is exciting enough that few pay attention and, oh yeah, they have TONS of work to do. As for the “gray-haired partners,” our source confirmed their attitudes as well, saying that there would be little motivation to speak up when they are “riding out their careers” or have a lot vested with the firm already.

Getting back:

The thing is that these leaders represent our firm, manage our firm, and control our collective destinies. They also rig the elections. And they then tout, continuously, the importance of the “Sense of Partnership.” The truth is that Deloitte is not run like a partnership. Yes, the partners have capital at risk, we are owners of the “Firm.” But, we are not appropriately represented. We lack a true collective voice. We keep quiet for the “good of the Firm.” And, we are now going to embark on a new “BOLD LEADERSHIP” move that is being done to passify all the various interests of our firm (Consulting, Audit and Tax). The thing is – we don’t attempt to have our partners select the BEST leaders – but simply the leaders that a select few believe fit a set of criteria that are BEST for us ignorant partners. It’s a bit like the government telling us what is good for us.

It angers me. And, I wish that I could wake up every Deloitte partner and have them realize this. But – if I did this – I’d likely be fired. So, I’m sending this to you to see if you can help WAKE up our Partners!! They should VOTE NO to the nominating committees recommended leaders. We need to take back our firm, much like the American voters took back our country.

[Signed,]
An anonymous Deloitte partner who cares deeply about our Firm and our culture.

Our “anonymous Deloitte partner” speculated that 75% of partners share his/her feelings on this. What’s been the catalyst to all this frustration? Well, the former Deloitte partner we spoke to said that it’s a partly the nature of the governance process itself but it has been made worse by how leadership handled layoffs and the economic crisis during 2008-2009. As you may remember, Deloitte leadership admitted that the May ’09 layoffs were handled poorly last spring, however, morale amongst partners remains extremely low.

Just to add a few more things from the “anonymous Deloitte partner” – when we asked about the details of the nominating process, the response we received was that while it was a “cordial” and that the partners that serve on the committee feel as though they are doing “God’s work,” but ultimately it is a “falsehood.” The former Deloitte partner confirmed this, who told us he had a friend who served on the nominating committee who joked with him about flying around the country, “listening to crap,” throughout the exercise.

When we asked about the firm’s leadership considering a more democratic process (i.e. partners are nominated by vote), that doesn’t appear to be on the table because another firm does it that way, “In situations where our CEO has been asked about the process, Barry Salzberg stated that our firm doesn’t want a divisive culture where certain partners get their feelings hurt in a race for the CEO spot or other positions. ‘That’s not part of our culture. That is what PwC does, and we don’t want to do that.’ “

Stepping back from all this (we realize it’s a lot), if we were a run-of-the-mill Deloitte partner, it be pretty difficult to see this as an equitable process. As we said at the outset, being a partner means having a say in how the business is run. Granted, when you’re talking about a firm as large as Deloitte, there has to be centralized leadership but wouldn’t you want a direct voice in determining who that leadership is and not simply up or down on a list of names handed to you? It sounds like a lot of partners at Deloitte are feeling shut out of this process. Maybe some don’t care but many new and aspiring partners probably do (Millennial attitude and all) and this lack of true representation will certainly make some think twice about their long-term careers with the firm.

Ernst & Young Partner May Have Known This Lehman Brothers Bankruptcy Situation Was Going to Get Worse

This was in January 2009 after the shit had hit the fan and E&Y’s partner on Lehman, Hillary Hansen, may have had an idea of how cozy she was going to get with bankruptcy examiners, the NYAG, SEC, PCAOB, etc.

Skip ahead to around 17:00 (you have to go to the website to watch) where Hansen says, “We audit Lehman Brothers, unfortunately,” to sparse chuckles.

Zero Hedge makes the case against E&Y (Hansen being the main culprit) in excruciating detail and thinks FSO might be down for the count:

[W]e are confident that (again, with the assumption that we live in some semblance of a sane/ration world), E&Y’s Financial Services Office is done (even despite such ironically apropos warnings on the firm’s website as “Top six liquidity risk management challenges for global banks “), and quite possibly the entire firm. Integrity is the number one currency for an auditor, and just like Anderson, E&Y’s just went out in a puff of green-colored smoke.

Deloitte’s Sharon Allen Will Be Having a ‘Big Party’ to Celebrate Her Retirement

Sharon Allen has spent 38 years at Deloitte. Doing the math on that, it probably feels more like a millennia. Accordingly, Ms. Allen has decided to hang up her green dot and chillax in Pasadena (Q&A with Accounting Today and we’ve picked out some of the highlights, including yes, a par-tay.


For starters, Sharon is a closer!

It’s a good time to leave when you’re on a high. I feel very confident in future leadership and the direction of our organization, and I think it’s just absolutely the right time to turn the reins over to others and proudly watch them continue to lead the firm in a good direction.

There will be a retirement rager, natch.

I’m going to have a big party. Yes.

Retirement will involve quality time with the hubby (but not so much that he goes nuts) and leading the Village People.

First of all I plan to spend a lot more time with my husband, family and friends, but of course there will probably be a limit on how much togetherness he can stand.[…] I have already committed to becoming the chairman of the board of the national YMCA board, which is an organization I’ve been involved with for over 25 years. I’m sure I will find ways to keep productively busy.

In case you weren’t aware, she doesn’t have a Y chromosome.

I am proud of many firsts that are in front of the titles I have carried. I was fortunate to be the first woman to become an office managing partner, the first woman to become a regional managing partner, the first woman to be elected to the board at Deloitte, and that’s been some years ago now. But I have to say my proudest accomplishment, I believe, was to have been elected as the first independent chairman of Deloitte’s board of directors. We separated our chairman and CEO role and created a full-time independent executive chairman of the board. It is an elected position by our partners, and I was very proud to be elected to that role. I always say, “Oh, by the way, I’m a woman.” It’s a very important distinction for me.

She’s more like you than you think – she got passed up for a manager promotion because her supervisor was clueless!

[P]erhaps one of the most important challenges that I had as I was coming up through my career also turned out to be one of my best lessons. That was when I was about four years into the firm and I expected an early promotion to manager, and I was passed over for that promotion. Interestingly, as I walked into my supervisor’s office and clicked off all the reasons why I thought I should have had the promotion and had earned it, he kind of sat back in his chair and looked at me and said, “I didn’t even know you did all those things.”

What about this boys club mentality?

I do think that there still is an underrepresentation of women in senior leadership in business generally and certainly in the board room of corporate organizations today. I do believe that organizations need to examine how they are recruiting, how they assure women are proportionally given the best assignments.

You know, back in the day, we basically had to come to work in drag.

There is a very big difference between today’s women and women of my era when I started in the profession because, in those days, honestly, you almost had to pretend there were no differences. I came up in the business world of wearing a suit and a little bow tie and trying to dress like the men and, of course, fortunately, men and women both can acknowledge the difference and benefit from that.

Leave Sharon your well wishes (or food and entertainment requests) below and if you get invited to this party, email us the pictures.

KPMG Partner Who Missed $1.9 Billion Error Having No Problem Blaming Others

Apparently it’s auditor punishment Monday. Or Tuesday, if you’re Down Under:

A lead KPMG auditor who only learnt about a $1.9 billion [about USD $1.88 billion] error in his audit of Allco Finance Group through a report in BusinessDay was benched for nine months by the corporate regulator yesterday.


To be completely fair, it sounds like it may have been a tricky audit:

Christopher Whittingham, a KPMG partner, led a core team of 20 audit staff that signed an unqualified audit report on the notoriously complex accounts for Allco for the year ended June 30, 2007.

Or was it?

The error detected by BusinessDay involved the 2007 accounts classifying $1.9 billion in liabilities owed by Allco as non-current, telling investors they fell due more than a year later. The liabilities were, in fact, current liabilities, meaning they were due within the year. The amount of current liabilities is a significant issue for shareholders when considering whether a company can meet its debts when they fall due.

Whatever the case may be, Mr Whittingham shouldn’t sweat it too much:

[T]he Australian Securities and Investments Commission released an enforceable undertaking with Mr Whittingham, which included a nine-month suspension, a $10,000 fine and 10 hours of professional education.

Well, at least he’s taking responsibility for his mistake and isn’t pointing his finger at anyone else or making excuses, right?

Mr Whittingham said he had relied on managers for aspects of the audit, the error had no bearing on Allco’s collapse and he had reissued its accounts the day after he became aware of the error.

Oh.

Regulator suspends senior KPMG auditor [Sydney Morning Herald]

Earlier:
(UPDATE) PCAOB Gives Ernst & Young Manager the Charlie Rangel Treatment

(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.”

Complaint_Deloitte