WASHINGTON (AP) — Federal regulators on Tuesday charged a former partner at Deloitte & Touche LLP and his wife with insider trading, accusing the couple of providing confidential information on company acquisitions to relatives overseas.
The Securities and Exchange Commission announced the civil charges against Arnold McClellan and his wife, Annabel, who live in San Francisco. The SEC alleged in a lawsuit that the McClellans gave advance notice of at least seven acquisitions planned by the accounting firm's clients to Annabel's sister and brother-in-law in London, Miranda and James Sanders. The SEC said James Sanders' trades off the confidential information reaped profits of $3 million.
Annabel McClellan, 38, was arrested Tuesday by FBI agents on criminal charges of obstructing the SEC's investigation of the case. The indictment, handed up by a federal grand jury in San Francisco on Nov. 23, was unsealed Tuesday. McClellan appeared in federal court and was released on a $250,000 bond; she is scheduled to be in court again on Dec. 14.
The McClellans, through their attorneys, disputed the SEC's civil charges and said they would contest them in court.
The agency is seeking unspecified fines and restitution from them.
Arnold McClellan, 51, headed one of Deloitte's regional mergers-and-acquisitions teams, giving him access to highly confidential information, the SEC said. He provided tax and other advice to clients who were considering acquiring companies. He was a tax partner at the firm from 1995 to 2008, according the complaint.
"If the (SEC) allegations prove to be true, they would represent serious violations of our strict and regularly communicated confidentiality policies," New York-based Deloitte said in a statement. "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."
Britain's market regulator, the Financial Services Authority, announced charges Tuesday against the Sanders and colleagues of James Sanders to whom he passed the confidential information, the SEC said. The people who received the information from Sanders made about $20 million from trading on it, according to the SEC.
The information concerned pending transactions involving Kronos Inc., aQuantive Inc. and Getty Images Inc., the SEC said.
"Deloitte and its clients entrusted Arnold McClellan with highly confidential information," Marc Fagel, director of the SEC's San Francisco office, said in a statement. "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."
Elliot Peters and Christopher Kearney, attorneys for Arnold McClellan, said in a statement that he denies the SEC's claims "and will vigorously contest them."
"He did not trade on insider information, and there will be no evidence that he passed along any confidential information to anyone," the statement said. "He had no financial incentive to commit the actions alleged. 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."
Annabel McClellan's lawyer, Nanci Clarence, said her client "denies these allegations and did nothing wrong."
"She did not trade on nor did she possess insider information," Clarence said by telephone.