Insider trading suits continue to be a key focus in securities litigation. At the same time, SEC Chairman Cox highlighted the internal enforcement efforts of the Commission in a recent speech.

There is little doubt that insider trading has been a focus of the SEC in recent cases. This time however, a novel insider trading suit was not brought by the SEC, but a private litigant. The plaintiff in a new insider trading case is accounting giant Deloitte LLP. The defendant is a former partner and vice chairman of the firm resident in the Chicago office, Thomas Flanagan.

Mr. Flanagan, a thirty year veteran of auditor, has been accused of insider trading by his former firm. The suit claims he traded on inside information from an audit client regarding a take over. Indeed, overall the complaint claims Mr. Flanagan traded on inside information regarding twelve different clients over a three year period. The suit also alleges that Mr. Flanagan violated firm independence rules as to three clients.

The firm did not name the clients. According to a report in the Chicago Tribune, one deal involved in the insider trading claim concerned the acquisition by Walgreen Co. of Option Care Inc., in July 2007. That same report also suggests that clients Allstate Corp. and USG Corp. may have been involved.

The suit by Deloitte is aggressive and unusual. Indeed, the SEC is reportedly investigating the matter; its inquiry is incomplete at this point.

The internationalization of enforcement was the theme of a November 7 speech from SEC Chairman Cox. In his speech, Mr. Cox highlighted the Enforcement Division’s efforts at international enforcement. For example, last year the SEC made 556 requests of foreign regulators for assistance with its investigations. During the same period the Commission received 454 requests from foreign regulators for assistance.

Currently the Enforcement Division is working on 12 open subprime investigations with foreign regulators. Other recent highlights in the international area include:

• A recent ruling by the High Court of Justice in London ordering an asset freeze in the UK against a UK citizen who was a defendant in a pending SEC actions in Boston;

• A recent temporary restraining order the SEC obtained to freeze millions of dollars with the assistance of the Swiss Federal Banking Commission; and

• In another case still underway, the SEC is tracking a securities fraud scheme masterminded by a Spanish national in Barcelona who operated through a number of offshore companies based in Panama, Dominica, Belize, and the British Virgin Islands.

Overall the Chairman emphasized the continuing internationalization of SEC Enforcement.

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