Insider Trading? Face the FBI, SEC, and DOJ.
Imagine… you are in a conference room filled with FBI agents, SEC authorities and DoJ prosecutors and they demand to know the details about a friendship you made at a golf club. Overwhelming isn’t it? How about being faced with Federal criminal and civil charges for sharing information in casual conversation on the golf course with your golf buddy? That is what Scott London, the former KPMG partner in charge of audits for Herbalife Ltd. and Sketchers USA Inc is facing.
Confession for illegal insider trading.
According to his lawyer, Scott London decided to talk to the authorities after he was approached by the FBI in late March. He admitted his wrongdoing at a meeting in a room filled with FBI investigators, Justice Department prosecutors and the SEC authorities. The complaint alleges from late 2010 and continuing until March 2013, London secretly gave his friend highly sensitive and confidential information regarding upcoming earnings announcements of KPMG clients. London admitted to passing on stock tips about clients to his friend, Bryan Shaw in exchange for cash and gifts. The complaint alleges in exchange, Shaw gave London tens of thousands of dollars in bags of cash and gave him a Rolex worth about $12,000. “I regret my actions in leaking nonpublic data to a third party,” London told The Wall Street Journal. London said his leaks “started a few years back,” adding that KPMG bore “no responsibility” for his actions.
Illegal insider trading ends career.
The son of an accountant, Scott London worked at KPMG for 29 years and stayed at the firm his entire career because he loved his coworkers and enjoyed working with his clients. Nonetheless, KPMG didn’t hesitate to fire him as they took immediate action to resolve the situation by terminating London and also resigned as the auditor of the Herbalife and Sketchers accounts. KPMG said in a statement Monday that the partner who was fired “violated the firm’s rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG’s long-standing culture of professionalism and integrity.”
Consequences of illegal insider trading.
The consequences have only just begun for Scott London. Not only did he end his career, the Federal prosecutors in Los Angeles filed criminal charges of at least one count of conspiracy to commit securities fraud. The SEC is expected to file civil charges against London. The DoJ said he faces a maximum of 5 years in jail, and a fine of $250,000 or twice the gross gain from his crimes. The SEC, the FBI and the DoJ are continuing their investigations of trading the shares of several KPMG corporate clients on the West Coast.
Escalating drive against illegal insider trading.
Scott London is the latest professional to be snared in the escalating drive by U.S. authorities against insider trading. As the SEC, the FBI and the DoJ gang up on insider trading investigations, corporations are scrambling to ensure they nurture a culture of compliance to prevent violations. Authorities recommend all employees receive training and continuous awareness of illegal insider trading.
3 minute Sample of Insider Trading Awareness.
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