U.S. charges ex-KPMG auditor with insider trading

NEW YORK (AFP) ― The U.S. Justice Department on Thursday charged a former KPMG senior partner with insider trading with a friend who allegedly made more than $1 million in illegal proceeds.

Scott London allegedly gave confidential information on clients Herbalife, Skechers and Deckers Outdoor Corporation to his friend, Bryan Shaw, according to the U.S. Attorney’s Office for the Central District of California and the Federal Bureau of Investigation.

London, who oversaw KPMG’s audit practice for the Pacific Southwest, allegedly accepted bags of cash and a Rolex watch in exchange for the inside information, the authorities said in a statement.

London, 50, of Agoura Hills, California, has admitted he gave inside information to Shaw.

KPMG said Monday it had fired London after learning of his dealings with Shaw and resigned as auditor for Herbalife and Skechers.

“The public has every right to fully expect a level playing field in our financial markets,” said U.S. Attorney Andre Birotte.

“As alleged in the complaint, Mr. London chose to betray the trust placed in him as a financial auditor and to tip the trading scales for the benefit of insiders like himself.”

Shaw secretly compensated London with at least $50,000 in cash, as well as a Rolex watch and other jewelry, meals and tickets, according to the criminal charges.

The U.S. Attorney’s complaint against London alleged a single count of conspiracy to commit securities fraud through insider trading.

London faces up to five years in prison and a $250,000 fine if convicted.

The Securities and Exchange Commission also announced it had filed a parallel civil insider-trading charge against London and Shaw.

The cash was “usually delivered in bags” outside Shaw’s California jewelry store, the SEC said.

Shaw cooperated with the criminal probe into London’s actions. The FBI complaint released a photograph of London accepting cash from Shaw.