Fancy watches, Springsteen tickets and jail time - what more
could you want? Well, today two men have been charged in the KPMG
insider trading case. Federal authorities in Los Angeles have
filed criminal and civil insider-trading charges against former
partner of KPMG, Scott London, and his "golfing buddy" Bryan
Shaw. Scott London, 50, was fired last week after 29 years of
service from accounting giant KPMG after the company learned that
London had been trading nonpublic information about some of their
largest clients. Two of the clients were Herbalife (
) and Skechers USA (
). London was said to have been trading this information to a
good friend whose jewelry store was hit hard by the economic
crisis in California.
KPMG, one of the Big Four accounting firms in America,
immediately fired London and withdrew its services from Herbalife
and Skechers upon hearing of the insider trading investigation.
Along with its services, the company opted to withdraw its
auditor reports dating back to 2010 for both companies.
While Bryan Shaw has not been charged with criminal actions by
the FBI, both men have been charged in civil suits by the SEC.
London has been charged with conspiracy to commit criminal
securities fraud for giving illegal information to Shaw.
Over the past two years, London has been giving Shaw information
and in return Shaw has been giving London gifts such as a $12,000
watch and pricey tickets to a Bruce Springsteen concert.
Federal authorities initiated an investigation after the
brokerage firm Fidelity raised red flags about suspicious
activity in Shaw's account. Following this, investigators
confronted Shaw with evidence of the apparent insider trading. At
this point Shaw was forced to turn against his (now former)
friend. Shaw became a government informant and recorded several
conversations between London and himself.
The last straw occurred when London arranged a meet with Shaw to
discuss happenings at Herbalife. London mentioned rumors of
Herbalife going private and told Shaw that if this were to happen
"that is going to be where you make a ton of money."
FBI agents secretly took pictures of this meeting and Shaw
handing London a bag containing $5,000 for the information. The
agents arrested the former KPMG partner two weeks later in his
Agoura Hills, Calif., home.
In total London gave Shaw nonpublic information on five different
West Coast companies that KPMG worked with. This information led
to Shaw making $1.27 million dollars.
In a press statement released on Tuesday, Scott London said, "I
regret my actions in leaking nonpublic data to a third party.
What I have done was wrong and against everything that I had
And now Herbalife gets to clean up another controversy
surrounding its name.
Herbalife is constantly in the middle of an argument amongst the
Gurus. To view the complete list of gurus with a stake in HLF,
Herbalife's Guru Trades page
To view more articles on Herbalife,
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