LOS ANGELES — A former senior partner at the accounting firm KPMG LLP was sentenced today to 14 months in federal prison for his involvement in an insider trading scheme in which he provided confidential information about publicly traded clients to a man who paid him with cash bribes and luxury items.
Scott London, 51, of Agoura Hills, who oversaw KPMG’s audit practice for the Pacific Southwest until he was terminated last year after 29 years at the firm, was sentenced by United States District Judge George H. Wu.
In addition to the prison term, which London was ordered to begin serving on July 18, Judge Wu ordered him to pay a $100,000 fine.
London pleaded guilty last July to one count of securities fraud through insider trading.
According to court documents, London provided confidential information about KPMG clients to Bryan Shaw, a close friend of his, over a period of several years. Shaw then used this information to make highly profitable securities trades that allowed Shaw to realize more than $1.27 million in illegal proceeds.
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, including Herbalife Ltd. and Skechers USA, Inc. As a result of his position, London had access to confidential information about KPMG?s clients before that information was disclosed to the public. In his plea agreement, London admitted that he disclosed inside information to Shaw regarding at least 14 separate earnings announcements or acquisitions for KPMG clients.
Shaw admitted that he gave London approximately $70,000 in cash and luxury items 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 watch, as well as jewelry and concert tickets, in exchange for the confidential information.
On two occasions in early 2013, acting at the direction of the Federal Bureau of Investigation, Shaw met with London and gave him cash as supposed payment for confidential information about KPMG clients, according to court documents. In the first instance, London met with Shaw on a street corner in Encino and accepted a bag with $5,000 in cash as payment for confidential information about Herbalife’s earnings announcement in February 2013. London later met with Shaw in a parking lot in Woodland Hills and accepted another bag with $5,000 in cash, which was supposedly London’s share of the illegal profits from trades based on confidential information about Decker?s February 2013 earnings announcement.
Shaw pleaded guilty to a conspiracy charge in May 2013. Judge Wu is scheduled to sentence Shaw on May 19.
The criminal investigation into the insider trading scheme was conducted by the Federal Bureau of Investigation.
In a separate action filed last year, the U.S. Securities and Exchange Commission filed a civil lawsuit against London and Shaw (see: http://www.sec.gov/litigation/