A CALIFORNIAN businessman who exchanged cash and jewelry for insider information from a KPMG auditor has pleaded guilty in a US court.
Ex-KPMG audit partner Scott London is facing criminal charges for insider trading after it was revealed he was leaking information relating to five public companies to a friend, Bryan Shaw, in exchange for cash and gifts.
As part of the guilty plea Shaw has agreed to forfeit his trading profits of about $1.3m, the Wall Street Journal reports.
When the insider trading was discovered KPMG partner London was fired and the firm resigned as auditor of LA Galaxy sponsor Herbalife and shoe-maker Skechers.
At the time London told the WSJ he had leaked information but would not admit to receiving funds or gifts.
He claimed all actions “were by my choice and mine only” and that he was trying to help out a friend whose business was struggling.
“Never once did I pass any documents to him, but rather we spoke on the phone and the information I provided was in the form of a suggestion.
“Regardless, what I have done was wrong and against everything that I had believed in.”
Since the discovery of the insider trading it has been revealed Shaw allowed the FBI to record calls with London by wearing a wire.
It is also alleged that London received a Rolex watch, however, he claims that he received a discount and “on a couple of occasions” cash parcels of $1,000 – $2,000.
KPMG chairman and CEO John Veihmeyer has also waded into the issue, claiming that the firm is planning legal action against London.
London could face up to five years in prison and $250,000 in fines. Shaw could also face up to five years in prison, although it is likely he will receive a lesser sentence.
London had been with the firm for 30 years and headed up the audit division in the Los Angeles office.
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