Scott London was a partner in KPMG, a Big 4 accounting firm. He pleaded guilty to tipping off a friend, Bryan Shaw, about the company’s clients. Shaw’s trading patterns were very unconventional all of a sudden, and the FBI approached him soon – leading up to monitored calls in return for a more lenient term for Shaw.
Ultimately, this ended up being the undoing of London, who is out now and back to work.
Who Is Scott London And What Did He Do?
Scott London was a partner of the accounting firm KPMG. He was charged with insider trading and securities fraud relating to trades he made on behalf of his clients between 2010 and 2012. He was officially fired in 2013.
London tipped off his golfing buddy about KPMG’s client information such as for Herbalife Ltd. and Skechers USA Inc. His friend reportedly made millions with the information by making trades related to the companies. This happened over the course of 2 years from 2010 to 2012.
He received a Rolex, thousands of dollars, jewelry, concert tickets, and so on from Bryan Shaw in exchange for this information.
London was fired from his position after he was arrested on charges of securities fraud. He was caught mainly because of the fact that the FBI did an extensive investigation into Mr. Shaw’s trading patterns and listened in on his phone calls with Scott London in exchange for promised leniency to Mr. Shaw.
The Full Story
51-years old Scott London didn’t do it for personal enrichment. The gifts and cash he received from Shaw were worth nothing compared to his salary as a senior partner in such a big accounting firm. This is certainly unusual, as the judge also pointed out during the case.
There were a total of 14 instances where London passed confidential information to Shaw. The information was varied in nature. London oversaw the firm’s audit practice for clients based in Arizona, Nevada, and California. Herbalife and Skechers were under him personally.
His 3 decades in the company were no deterrent to him tipping off Shaw, who made many profitable trades.
- In May 2011, Shaw purchased thousands of Herbalife shares before the company was about to announce record sales. The result of the announcement was a 13% increase in the company’s share prices. Shaw sold all his shares netting a $450,000 profit within the next few days.
- London also told Shaw about another client, Pacific Capital Bancorp, which was to be acquired by Union Bank. The shares soared 57% after this news in March 2012. Shaw’s trade in the same netted him a profit of around $365,000.
These are a couple of examples of very well-timed trades. Regulators were after Shaw shortly and he agreed to cooperate by recording calls and more importantly, giving London cash as FBI agents took pictures of the incident.
Shaw was also guilty of conspiracy to commit insider trading.
What Is Scott London Doing Now?
Out of prison, Scott London hasn’t made his employer public but is working for a privately-owned company as an assistant to an executive.
It’s certainly a big step down from being a senior partner for a Big 4 accounting firm but he maintains that he’s ready for changing things.