Skip to main content
Advertising

Originally published April 11, 2013 at 10:30 PM | Page modified April 12, 2013 at 7:08 AM

  • Share:
           
  • Comments (1)
  • Print

Charges filed against KPMG insider who fed stock tips to friend

On Thursday, federal prosecutors filed criminal charges against KPMG senior partner Scott London, laying bare a brazen two-year insider trading scheme.

The New York Times

Most Popular Comments
Hide / Show comments
For punishment, London and Shaw will be forced to accept huge bonuses at taxpayer expense. MORE

advertising

The payments came in various forms. There were envelopes of $100 bills wrapped in $10,000 bundles. There were tickets to a Bruce Springsteen concert. There was a 2011 Rolex Cosmograph Daytona valued at $12,000.

Bryan Shaw, the owner and operator of a Los Angeles-area jewelry business, bestowed these gifts upon his longtime friend and golf buddy Scott I. London, a senior partner at the accounting giant KPMG. In return for such largesse, Shaw received secret information from London about KPMG clients, and earned more than $1 million illegally trading in the shares of publicly traded companies.

On Thursday, federal prosecutors filed criminal charges against London, laying bare a brazen two-year insider trading scheme. The Securities and Exchange Commission (SEC) filed a parallel civil case against London and Shaw.

“London was honored with the highest trust of public companies, and he crassly betrayed that trust for bags of cash and a Rolex,” George Canellos, the acting director of enforcement at the SEC, said in a statement.

London and Shaw have already acknowledged their misconduct in statements issued through their lawyers.

“I regret my actions in leaking nonpublic data to a third party,” said London, 50, of Agoura Hills, Calif., in a statement made on Tuesday. London was arraigned Thursday afternoon at U.S. District Court in Los Angeles.

Shaw, 52, of Lake Sherwood, Calif., said he had accepted “full and complete responsibility for what I have done.”

Indeed, Shaw began cooperating with the government in February after they confronted him with evidence of insider trading. He turned against his friend, recording telephone conversations and in-person meetings to help the authorities build a case against London.

Last month, Shaw participated in a sting operation to ensnare London. The FBI provided Shaw with $5,000 cash, which was placed in a manila envelope and then wrapped inside a black paper bag. Shaw met London in the parking lot outside of a Starbucks and handed him the bag. Federal agents took photographs of the exchange, one of which was included in the government’s complaint Thursday.

Federal authorities opened up an investigation last July after the brokerage firm Fidelity raised red flags about activity in Shaw’s account. After Fidelity put Shaw’s account on hold, Shaw called London to express concern that they had been found out.

“Shaw said that London reassured him that there was no reason for concern, and explained that insider trading was like counting cards at a casino in Las Vegas — if you were caught they simply ask you to leave because they cannot prove it,” according to the government’s complaint.

London worked for nearly 29 years at KPMG, rising to a senior partner in the firm’s Los Angeles office, where he supervised more than 500 accountants and oversaw the audits for some of its most important clients. Over a 2-year period, London secretly passed sensitive information to Shaw about a number of different KPMG clients, including Herbalife, the nutritional-supplement company; the footwear-makers Skechers and Deckers Outdoor; and Pacific Capital Bancorp, the government said.

News where, when and how you want it

Email Icon

The Seattle Times Historical Archives

Browse our newspaper page archives from 1900-1984


Advertising
The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Subscriber login ►