(Adds background on the case, details, no comment from Adams'
By Sarah N. Lynch
WASHINGTON May 20 A former chief risk officer
for accounting giant Deloitte & Touche agreed to
settle civil charges on Tuesday alleging he violated rules
governing auditor independence, U.S. securities regulators said.
James T. Adams agreed to be suspended for two years from
practicing as an accountant for public companies, the Securities
and Exchange Commission said.
He will also not be able to serve during the two-year period
as an accountant for other SEC-regulated entities, such as
broker-dealers and investment advisers.
The SEC said Adams ran afoul of rules designed to make sure
auditors are objective and impartial after he accepted tens of
thousands of dollars in "casino markers" at the same time he was
serving as an adviser on the audit of a casino gaming
Casino markers are used by gambling customers to receive
gaming chips drawn against their lines of credit at a casino.
Scott Schreiber, a partner at law firm Arnold & Porter
representing Adams, declined to comment.
SEC rules generally require auditors to refrain from conduct
that could impede their independence as objective watchdogs,
such as owning the stock of a client company or offering
non-audit services to an audit client.
In this case, the SEC said Adams opened a line of credit at
a casino that was run by an audit client, and that he concealed
his casino markers from Deloitte and another Deloitte partner.
"The transactions by which Adams accepted the casino markers
were loans from an audit client that are prohibited by the
auditor independence rules," said Scott Friestad, an associate
director in the SEC's enforcement division.
"Auditor independence is critical to the integrity of the
financial reporting process," Friestad said. "Through his
extensive use of casino markers, Adams clearly violated the
rules and put his own desires ahead of his client's interests."
(Reporting by Sarah N. Lynch; Additional reporting by Jonathan
Stempel in New York; Editing by Eric Beech and Peter Cooney)