Friday, November 2, 2012

SEC Litigation Releases: Week in Review

Commission Files Subpoena Enforcement Action Against Adam Bielski, November 1, 2012, (Litigation Release No. 22525)

On October 24, 2012, the SEC filed an application for "an order to enforce an investigative subpoena served on Adam Bielski." In August the SEC "issued a formal order of private investigation authorizing its staff to investigate...potential compliance and security deficiencies at a Massachusetts-based investment adviser...registered with the Commission." Specifically, the staff investigated "whether the IA's compliance and security policies and procedures were reasonably designed to protect against recent instances of attempted and actual theft of client assets managed by the IA." One instance of this alleged theft involved funds being transferred by "an apparent hacker" to Bielski's bank account. Bielski -- in voluntary interviews with the SEC -- admitted to receiving funds from Faith Collins, a woman whom he has had a six-year long association with on the internet, at least once in June 2012. A subpoena was issued against Bielski by the SEC on August 31, but according to the SEC "Bielski has failed to produce many of the responsive documents in his possession" and he "does not have a credible justification for his failure to comply with the subpoena." A hearing on the SEC's application is scheduled for November 9, 2012.

Former Deloitte Partner Sentenced to 21 Months for Insider Trading, October 31, 2012, (Litigation Release No. 22524)

Thomas P. Flanagan, former Deloitte and Touche LLP partner, was sentenced to 21 months of incarceration followed by supervised release of 12 months, and was ordered to pay a $100,000 penalty for engaging in insider trading. These charges came from "the same facts that were the subject of a civil action...filed against Flanagan and his son, Patrick T. Flanagan." Flanagan, who worked at Deloitte for 38 years, allegedly "traded on nine occasions between 2005 and 2008...while in possession of nonpublic information that he learned through his duties as a Deloitte partner." On four occasions, Flanagan shared this information with his son, who also traded on it. In total, the pair gained over $480,000 in illicit profits. In addition, the SEC found that Flanagan "violated the SEC's auditor independence rules on 71 occasions between 2003 and 2008." Both Thomas and Patrick Flanagan were charged with violating various sections of the Exchange Act. The pair has been ordered to pay over $1.17 million in disgorgement, prejudgment interest, and penalties. 

No comments:

Post a Comment

Please keep comments appropriate. Malicious comments or solicitations will be removed.