Ex-Deloitte Partner, Wife Settles SEC Charges

Michelle Remo, “Big 4″ observer
October 18, 2011 /

A former tax partner at Deloitte and his wife settled the charges filed by the US Securities and Exchange Commission on November 30 last year after they have allegedly tipped members of their family to non-public information about a merger.

Arnold McClellan and wife Annabel, from San Francisco, allegedly let out the information about a planned acquisition of Deloitte’s clients and gave it to Annabel’s sister and brother-in-law in London. The brother-in-law, then, assumed financial positions in different US companies subject to the merger and acquisition when he received the bribe.

The SEC claimed the two had leaked confidential information about merger and acquisition several times to members of family abroad, the worth of which amounted to $3 million.

Annabel McClellan agreed to pay $1 million to settle the charges.

The SEC will dismiss its own claims against Arnold McClellan, who headed one of Deloitte’s regional mergers and acquisitions teams, if a federal judge approves the wife’s settlement, according to Daniel Bookin, his legal counsel.

According to a consent of final judgment filed in federal court in San Francisco, Annabel McClellan did nothing wrong.

Annabel McClellan, who pleaded guilty in April to one count of obstructing the investigation, admitted that she had overhead her husband talking about the deals and passed the information to her brother-in-law, according to a transcript of her change of plea hearing.

Arnold McClellan had been entrusted with Deloitte’s top confidential information when he served as Deloitte’s regional mergers and acquisitions team head, providing advice related to tax to clients of Deloitte who were mulling over engaging in merger and acquisitions.

The McClellans, of San Francisco, were accused last year of allegedly telling family members of at least seven confidential buyouts between 2006 and 2008 planned by Deloitte’s clients, including Kronos Inc., aQuantive Inc. and Getty Images Inc.

The succeeding insider trading schemes have been timed with telephone calls between Annabel McClellan and her sister, and a series of in-person visits with the rest of the family members. Half of the trading scheme’s yield went to Annabel McClellan.

The UK Financial Services Authority sued family members James and Miranda Sanders, together with James’s accomplice when he was working at a derivatives firm based in London. The same trading scheme earned for Sanders’s tippees nearly $20 million in U.S. dollars.

McClellan told prosecutors that her husband wasn’t aware of or involved in passing information, court papers showed.

 

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