May 28 Scott London, a former senior partner
with accounting firm KPMG, agreed to plead guilty to securities
fraud for his involvement in insider trading, according to an
announcement from the U.S. Attorney's Office in Los Angeles.
London, 50, supervised more than 500 accounting
professionals at KPMG and oversaw audits of Herbalife Ltd
and Skechers USA Inc, according to prosecutors.
He faces a maximum term of 20 years in federal prison and a
maximum fine of $5 million or twice the gross gain or gross loss
resulting from his offense, according to the plea agreement.
London's plea agreement comes about a week after his
one-time golfing buddy Bryan Shaw pleaded guilty to one count of
conspiracy to commit securities fraud for his role in the
London and his lawyer Harland Braun were not immediately
available to comment.
Shaw, a jeweler, gave London cash, an expensive watch and
other gifts in exchange for tips on Herbalife, Skechers and
other companies that helped him generate more than $1 million in
illegal profits, according to prosecutors.
Shaw sometimes gave London bags filled with cash at meetings
on street corners and in parking lots, according to prosecutors.
In his plea agreement, London admitted that he gave Shaw
inside information regarding at least 14 separate earnings
announcements or acquisitions by KPMG clients, including
Herbalife's May 2, 2011 earnings announcement and United
Rentals' Dec. 16, 2011 announcement of its acquisition
of RSC Holdings, according to prosecutors.
Shaw agreed to pay around $1.3 million in restitution and
will continue to cooperate with the government's investigation
as part of his plea.
London is scheduled to appear in federal court on Friday,
though that will likely be pushed back, according to the U.S.
Attorney's Office in Los Angeles.
Shaw, who pleaded guilty on May 20, has a sentencing hearing
on Sept. 16.
Manuel Goncalves, a spokesman for KPMG, did not immediately
return requests for comment.