Deloitte will be able to proceed with a lawsuit against a former vice chairman the firm accuses of insider trading, a judge ruled.
Thomas Flanagan was sued last October, with the firm claiming he profited from stock trades using inside information about the firm's audit clients (see Deloitte Sues Ex-Vice Chair for Insider Trading). He allegedly traded in put and call options of at least a dozen Deloitte audit clients between January 2005 and June 2008, including seven clients for whom he served as an advisory partner. The firm claims Flanagan lied when he was questioned about the trades, and the lawsuit seeks compensation paid to him by Deloitte.
Flanagan's attorney asked a Delaware court to dismiss the suit, claiming that his compensation is safeguarded under the federal Employee Retirement Income Security Act and that the firm did not provide an actual claim of damages, according to Reuters.
However, Delaware Chancery Court Vice Chancellor John Noble denied the motion to dismiss the case, saying the court had not yet sorted out the issues of the damage claims and whether Flanagan was protected under ERISA.
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