It has shades of a Hollywood crime story.
An accountant and a jeweler are longtime friends and golf partners. But then the down-on-his-luck jeweler convinces the accountant to pass along private information about clients, and uses the insider information to play the stock market and win big. Bags of cash swap hands in alleys. Then the feds get wind of the scam. The jeweler turns state’s witness and amid a spiral of wire taps and surveillance photos, the men’s reputations unravel and their mea culpas play out on a very public stage.
On Thursday, federal prosecutors and the Securities and Exchange Commission filed criminal and civil charges against fired KPMG accounting partner Scott London for conspiracy to commit securities fraud through insider trading. The 24-page criminal affidavit alleges that London, 50, provided confidential information about KPMG audit clients Herbalife Ltd., Skechers USA Inc., Uggs maker Deckers Outdoor Corp., RSC Holdings and Pacific Capital to Bryan Shaw, a close friend, from late 2010 until last month. Prosecutors allege that Shaw made more than $1.2 million in illicit profits by trading in advance of company announcements on earnings results or mergers.
The government alleges that on some occasions, London called Shaw two to three days before press releases were issued for KPMG clients and read confidential information from the draft releases to Shaw. London, who worked for KPMG for nearly 30 years, also disclosed confidential information about impending mergers concerning KPMG clients before that information was made public. He discussed how to structure Shaw’s purchases of the stock in certain companies in order to protect them from being discovered, according to the complaint.
The government‘s complaint quotes Shaw as saying that he expressed concerns to London in late 2011 about trading ahead of RSC Holdings’ sale to United Rentals, but that London told him not to worry because regulators weren’t looking for “small fish.”
Shaw passed London “tens of thousands of dollars in cash” in bags over the years for the information, according to the government. London also received a $12,000 Rolex watch, as well as jewelry for his wife and concert tickets. London‘s lawyer Harland Braun has said London received “about $25,000” over several years. The SEC puts the cash sum at at least $50,000.
The scandal has unfolded in pieces this week. Late Monday KPMG announced that it fired a Los Angeles partner who leaked nonpublic information about companies that KPMG worked with. On Tuesday nutritional supplement maker Herbalife and shoe seller Skechers announced that they were the companies whose information was
From: http://feeds.foxnews.com/~r/foxnews/national/~3/mVm_8wKvk_A/
