By Francine McKenna, Contributor Much has been written about Scott London, the KPMG partner in charge of the firm’s southern California audit practice, and his illegal and career-limiting-move of passing inside information to a jeweler buddy. KPMG may be sorry, at this point, for starting the ball rolling April 8 with its press release. Deloitte hid Vice Chairman Flanagan’s violations as long as possible and made few comments. Deloitte, and Flanagan, successfully stayed out of the national and world news except when something happened in court. Flanagan actually traded on the inside info he filched and I think that’s an even worse indictment of a partner and his audit firm, if one was possible, than what happened at KPMG.
Tag Archives: Scott London
KPMG and Scott London: Long-Forgotten Devil's Deal Means Feds Are Unlikely to Bring Corporate Charges
By Harvey Silverglate, Contributor
KPMG LLP, one of the Big Four international accounting outfits, just got a bitter taste of what happens when a partner’s loyalty to the firm erodes. During a March 20 interview with the FBI, former Los Angeles-based partner Scott London admitted to passing confidential inside information about some of the firm’s audit clients to a friend, Bryan Shaw. Shaw reportedly admitted to trading on that information and making over a million dollars, a small portion of which he shared with London. The Wall Street Journal reported that KPMG Chairman and Chief Executive John Veihmeyer was “appalled” to learn of Mr. London’s “violations of trust.”
Ex-KPMG partner hit with civil, criminal charges
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/
KPMG Statement On Scott London Criminal and Civil Charges
By Francine McKenna, Contributor I asked KPMG spokesman Seth Oster for a statement on KPMG‘s next steps and further investigation given the more extensive charges leveled against Scott London by the Department of Justice and the SEC. I received this statement this evening. (Emphasis mine.) STATEMENT FROM KPMG CHAIRMAN & CEO JOHN VEIHMEYER KPMG LLP Chairman and CEO John Veihmeyer issued the following statement upon reviewing the criminal complaint filed today against former partner Scott London. London was charged today in the Central District of California for conspiring to commit securities fraud through insider trading. “I was appalled to learn of the additional details about Scott London’s extraordinary breach of fiduciary duties to our clients, KPMG and the capital markets. We unequivocally condemn his actions, and deeply regret the impact that his violations of trust and the law have had on our clients and our people. KPMG will be bringing legal actions against London in the near future. “As a result of his unlawful activities, it was clear that our independence had been impaired with respect to the two companies for which he served as lead partner, Herbalife and Skechers. Due to this impairment, we were professionally obligated to take the regrettable action to resign as the independent auditor for these two companies and withdraw our previously issued audit reports. The sole reason for these steps was the actions of our former partner and we have no reason to believe that their financial statements are materially misstated.”
Price Of Former KPMG Auditor's Integrity: Fifty Grand, A $12,000 Rolex And Some Springsteen Tickets
By Steve Schaefer, Forbes Staff
So what does it take to wring sensitive information out of somebody? In the case of former KPMG audit partner Scott London the answer is apparently a fancy watch, a few concert outings, some free dinners and the old standby, cold hard cash.
Fmr KPMG Partner, Scott London, Legal Strategy – Admit Guilt Before Charges
In the old days, last week, many accused of white-collar crimes took a traditional path of 1) Retaining a Lawyer, 2) Denying the Charges, and, after a long while, 3) Admitting guilt through a plea agreement. However, the case of former KPMG partner Scott London is embarking on new ground … admitting guilt before he is even charged.