Enforcement: Former Deloitte employee settles insider trading charges

The four, John A. Foley, Aaron M. Grassian, Timothy L. Vernier, and Bradley S. Hale, settled the Commission's charges without admitting or denying the allegations in the Commission's Complaint, and their settlement papers have been submitted to the Court for its consideration.

The SEC alleged that Foley served as an employee benefits specialist at Deloitte between July 2005 and May 2007, and learned, through his work on Deloitte client engagements, material, non-public information concerning (i) Crocs' first earnings release after going public; (ii) a potential acquisition of YRC by a third party (that ultimately was not consummated); and (iii) the acquisition of Spectralink, via tender offer, by another public company. According to the Complaint, Foley traded in all three issuers' securities based on this material, non-public information through nominee accounts; Foley also tipped his friend Vernier concerning all, and Grassian concerning part, of this information; and both men traded on Foley's communications.

The SEC alleged:

- Grassian later reciprocated by, in turn, tipping Foley concerning the acquisition of SigmaTel by Freescale Semiconductor, Inc., after learning of that pending acquisition from his friend and former colleague, Hale, who worked on the acquisition for Freescale.

- Grassian traded on Hale's tips for himself, and also passed them on to Foley, who, in turn, both traded in SigmaTel for himself, and also tipped Vernier and recommended SigmaTel to others, who likewise traded.

- Vernier substantially assisted Foley's insider trading violations as to Crocs by allowing Foley to trade in Crocs securities through Vernier's account, while knowing of or recklessly disregarding Foley's breaches of duty to Deloitte and to Crocs.

- since Crocs was a Deloitte audit client and Foley served on the Crocs audit team at the time of his Crocs trading and tipping, Foley also committed, and caused his firm to commit, an auditor-independence breach, and caused related issuer-reporting breaches by the issuer.

The four defendants' signed Consents—which are subject to approval by the Court—provide that, without admitting or denying the Commission's allegations, each defendant would be permanently enjoined against future violations of the statutes and rules each is alleged to have violated, with the monetary portions of each settlement being as follows:

- (i) Foley would pay disgorgement of USD125,538.61, plus pre-judgment interest thereon in the amount of $18,697.89, with no civil penalty being imposed against him based on his demonstrated inability to pay;

- (ii) Vernier would pay disgorgement of USD50,285.08, plus pre-judgment interest thereon in the amount of USD6,320.29 and a civil penalty of USD23,138.07, with no further civil penalty being imposed based on his demonstrated inability to pay;

- (iii) Grassian would pay disgorgement of USD34,756.93, plus pre-judgment interest thereon in the amount of USD4,768.39 and a civil penalty of USD34,756.93; and

(iv) no civil penalty would be imposed upon Hale, based on his demonstrated inability to pay.

No charges were filed against Deloitte or Crocs.