Deloitte LLP’s former chief risk officer has settled auditor independence charges brought against him by the U.S. Securities and Exchange Commission by agreeing to relinquish his license to practice as an accountant at any SEC-regulated entity for at least two years.
The SEC had charged James Adams, of California, with “causing violations of the auditor independence rules that ensure audit firms maintain their objectivity and impartiality with respect to their clients,” the agency said in a press release issued Tuesday.
The charges that resulted in the license suspension were based on allegations that Adams, 62, accepted tens of thousands of dollars in so-called “casino markers” that allowed him to gamble on credit from an unidentified casino operator whose finances he was auditing.
According to the SEC release, Adams, who retired from Deloitte in May 2010, did not tell his firm about the arrangement and lied to a Deloitte colleague when asked if he had accepted casino markers from audit clients.
According to a Reuters report on the settlement, Adams’ lawyer, Arnold & Porter partner Scott Schreiber, declined to comment on the matter.
“The transactions by which Adams accepted the casino markers were loans from an audit client that are prohibited by the auditor independence rules,” Scott Friestad, associate director in the SEC’s Division of Enforcement, said in the agency’s release. “Though his extensive use of casino markers, Adams clearly violated the rules and put his own desires ahead of this client’s interests.”
Contacted by law.com for comment, a Deloitte spokesman issued the following statement: “Deloitte fully cooperated with the SEC in its investigation of Mr. Adams. This former partner’s conduct plainly violated Deloitte’s policies, and he lied to Deloitte to conceal his actions. Mr. Adams is no longer part of our organization, and we strongly condemn his conduct.”