Scott London, Insider Trading, California 2013

LOS ANGELES, California - In a shocking case of insider trading, Scott London, a former senior partner at the accounting firm KPMG LLP, has agreed to plead guilty to securities fraud. London, 50, of Agoura Hills, oversaw KPMG's audit practice for the Pacific Southwest and provided confidential information about KPMG clients to a close friend, Bryan Shaw, in exchange for cash bribes and luxury items.

According to court documents, London provided confidential information about KPMG clients, including Herbalife Ltd. and Skechers USA, Inc., to Shaw over a period of several years. Shaw then used this information to make highly profitable securities trades that earned him more than $1 million dollars in illegal proceeds.

“Over the course of several years, Mr. London secretly fed confidential, insider information to a man he knew would use that information to make trades,” said United States Attorney André Birotte Jr. “Behavior like this is an affront to people who follow the law and compromises the public perception in the inherent fairness of the markets by creating an uneven playing field. As a result of his illegal conduct, Mr. London has agreed to plead guilty and will face a lengthy prison term.”

London was a senior partner at KPMG who supervised more than 500 accounting professionals at the firm and personally handled audits for major KPMG clients. He had access to confidential information about KPMG's clients before that information was disclosed to the public.

London admitted that he disclosed inside information to Shaw regarding at least 14 separate earnings announcements or acquisitions for KPMG clients, including: Herbalife's May 2, 2011 Earnings Announcement; United Rentals' December 16, 2011 Announcement of its Acquisition of RSC Holdings; Herbalife's February 21, 2012 Earnings Announcement; Deckers Outdoors' February 23, 2012 Earnings Announcement; Union Bank's March 12, 2012 Announcement of its Acquisition of Pacific Capital Bancorp; and Deckers Outdoors' April 26, 2012 Earnings Announcement.

Shaw has admitted that he gave London tens of thousands of dollars in cash in exchange for the inside information about KPMG's clients. According to court documents, Shaw also said that he typically arranged to meet London on a side street near Shaw's business so that he could give London bags containing $100 bills wrapped in $10,000 bundles. Shaw also said that he gave London a $12,000 Rolex Daytona Cosmograph watch, as well as jewelry and concert tickets, in exchange for the confidential information.

London is charged with one count of securities fraud through insider trading, which carries a statutory maximum penalty of 20 years in federal prison. He has agreed to plead guilty to the felony count and will face a lengthy prison term.

Bill L. Lewis, the Assistant Director in Charge of the FBI's Los Angeles Field Office, stated: “This case illustrates the FBI's commitment to investigating insider trading and working to ensure integrity in our financial markets. “We will continue to work with our partners to identify, investigate and prosecute securities fraud cases in order to maintain that confidence in the marketplace.”

The case is a significant blow to the accounting firm KPMG, which has a reputation for integrity and transparency. The incident highlights the importance of maintaining confidentiality and upholding the highest standards of ethics in the financial industry.

This is a developing story, and we will continue to provide updates as more information becomes available.

Source: https://www.justice.gov/usao-cdca/pr/former-senior-partner-kpmg-agrees-plead-guilty-los-angeles-federal-charges-related