FORMER KPMG partner Scott London has entered into a plea agreement over allegations he committed insider trading fraud.
London, who headed KPMG’s Los Angeles audit practice, exchanged cash and jewellery for the information he obtained in his role as auditor for the Big Four firm to a golfing buddy.
The plea deal comes a week after his golfing mate Bryan Shaw pleaded guilty to one count of conspiracy to commit securities fraud, Reuters reports.
As part of the deal, which was teed up earlier this month, Shaw has agreed to forfeit his trading profits of the about $1.3m (£855,000) however his sentencing is due to take place on 16 September.
It has also been revealed that Shaw gave inside information regarding at least 14 separate earnings announcements or acquisitions by KPMG clients including; nutrition business Herbalife’s 2 May 2011 earnings announcement; and United Rentals’ 16 December 2011 announcement of its acquisition of RSC holdings.
When the insider trading was discovered he was fired and KPMG resigned as auditor of Herbalife and shoe-maker Skechers.
At the time London wrote a confession letter to the Wall Street Journal admitting to helping a friend 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.
Since the discovery of the insider trading it has been revealed that Shaw, who he was giving information to, allowed the FBI to record calls with London by wearing a wire.
At the time of the discovery KPMG chairman and CEO John Veihmeyer told the Wall Street Journal the firm was considering taking legal action against London.
He added that he was “appalled” to learn the detail s and that KPMG “unequivocally condemn” London’s actions and “deeply regret the impact” it has had on clients and employees.
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