Release:#3943-96 (Docket #96-10)

For Release:September 25, 1996

DELOITTE & TOUCHE AGREES TO PAY A $100,000 CIVIL PENALTY TO
    SETTLE A CFTC ADMINISTRATIVE COMPLAINT FILED AGAINST IT AND THOMAS D. LUX,
    A PARTNER IN THE ACCOUNTING FIRM

The CFTC Action Finds Deloitte & Touche Liable for Lux's
    Violations Arising Out of Deloitte's Audit of First Commercial Financial
    Group Inc. of Chicago

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
    today that it has issued an order instituting an administrative proceeding
    against Deloitte & Touche LLP (Deloitte), a partnership of
    certified public accountants and consultants headquartered in Wilton,
    Connecticut, and Thomas D. Lux, a former partner in Deloitte's
    Chicago office, for violations of CFTC regulations arising out of
    Deloitte's 1993-1994 audit of First Commercial Financial Group Inc. (FCFG)
    of Chicago, a futures commission merchant, registered with the CFTC.
    Simultaneous with the filing of the complaint, the CFTC accepted offers of
    settlement from both Deloitte and Lux.

Under the terms of the Lux settlement, Lux is censured by the CFTC for
    violations of CFTC regulations and for improper professional conduct, and
    he is ordered to cease and desist from further violations of the CFTC's
    regulations.

Under the terms of the Deloitte settlement, Deloitte will pay a $100,000
    civil monetary penalty and will comply with undertakings, for a period of
    four years following the entry of the order, that 1) the concurring
    reviewer on each and every audit of a CFTC registrant shall have at least
    five years of experience auditing CFTC registrants or broker- dealers, and
    2) in each year any Deloitte partner acts as a concurring reviewer on
    audits of futures commission merchants such partner shall take at least 8
    hours of continuing professional education courses dealing with futures
    commission merchant and broker- dealer issues.

CFTC Director of Enforcement Geoffrey Aronow, in commenting on the
    settlement, stated: "This action marks the first time that the Commission
    has exercised its authority under the regulations to censure an individual
    auditor for unprofessional conduct in the audit of a CFTC registrant. It
    sends a clear message to accounting firms and professionals that the
    Commission pays attention to the way they discharge their obligations and
    responsibilities with respect to registered entities."

Aronow also noted that "these professionals play a vital role in
    maintaining the integrity of our futures markets and often provide the
    public with its first line of defense against undercapitalized or
    unscrupulous entities."

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The CFTC's order finds that Lux failed to conduct the audit of FCFG's
    financial statements for the year ending December 31, 1993, in accordance
    with generally accepted auditing standards (GAAS) and failed to investigate
    properly and report on material inadequacies in FCFG's internal
    controls.

As to Deloitte & Touche, the order finds that the accounting firm is
    liable for Lux's violations of the CFTC's regulations under section 2(a)(1)
    of the Commodity Exchange Act (CEA).

Specifically, the order finds that Lux failed to make the appropriate
    inquiry required by GAAS when he discovered that FCFG had made
    disbursements, in the form of unsecured loans, in excess of $1.6 million.
    The unsecured loans were made subsequent to the balance sheet date, but
    prior to the date the audit report was issued. Moreover, the auditor's
    report submitted by Lux did not appropriately reflect that FCFG's financial
    statements failed to disclose the effect of the unsecured loans on FCFG's
    capitalization.

The order further finds that, during the course of the audit, Lux was
    made aware of material inadequacies in FCFG's internal controls, which he
    failed to investigate or resolve. For example, the order finds that Lux was
    aware of the unsecured loans and that FCFG's had failed to prepare a
    month-end capital computation, as required by CFTC regulations for January,
    1994.

These events, when viewed in the aggregate of the surrounding
    circumstances, required a conclusion that material inadequacies existed in
    FCFG's internal controls. Without any additional inquiry Lux concluded that
    there were no material inadequacies in internal controls. Furthermore, he
    submitted a supplemental report which failed to report these material
    inadequacies to FCFG or the CFTC.

Finally, the order finds that Lux engaged in improper unprofessional
    conduct during the course of the audit. Lux ceased being a partner on June
    1, 1996, and has terminated his employment with Deloitte.

Earlier, in May 1995, the CFTC Filed an Enforcement Action Against
    First Commercial Financial Group and Two Individuals

The CFTC on May 2, 1995, filed an administrative complaint against First
    Commercial Financial Group and two individuals charging all respondents
    with violating the CEA and CFTC regulations by, among other things, failing
    to maintain required net capital, operating while undercapitalized, and
    filing reports with the CFTC containing willfully false statements
    (See CFTC News Release #3841-95, May 2, 1995, Docket #95- 10). This
    action is still in litigation.

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