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First guilty plea in KPMG insider trading fiasco – 5-7-13 update

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On Monday, the Department of Justice indicted Mr. Bryan Shaw, the golfing buddy of former KPMG partner Scott London on one felony count of conspiracy. Mr. Shaw reportedly entered a plea agreement saying he would plead guilty and agree to disgorge about $1.27M of profits.

The press release from the Department of Justice is here.

A few other news reports:

I’ve looked briefly a couple of times and can’t find the indictment and plea agreement on-line.

Here are a few comments in the DoJ press release I found interesting.

Here’s the summary:

Bryan Shaw, 52, of Lake Sherwood, California, was charged this morning in United States District Court with one count of conspiracy. In a plea agreement also filed this morning, Shaw agreed to plead guilty to the felony offense and admitted that he plotted with the former KPMG partner to commit securities fraud. As part of the agreement with federal prosecutors, Shaw agreed to disgorge approximately $1,271,787 in illegal stock trading profits.

More detail on the payments to Mr. London is in the press release. Notice the amount of cash is now “more than $60,000.” That is an increase of the previously reported amount, but not by a lot.

Shaw admits in his plea agreement that he gave London more than $60,000 in cash in exchange for confidential information about KPMG’s clients, typically meeting with London near Shaw’s Encino jewelry store to give him bags containing stacks of $100 bills. Shaw also admits in his plea agreement that he gave London a $12,000 Rolex Daytona Cosmograph watch, as well as jewelry and concert tickets, in exchange for the confidential information.

The penalty can include double the gain from the insider trading. That could expose Mr. London to a $2.5M disgorgement, but I don’t know if the Feds do a double counting on the disgorgement issue:

The federal charge of conspiracy to commit securities fraud carries a statutory maximum penalty of five years in prison, and a fine of $250,000 or twice the gross gain or loss from the offense.

Not much new since the story first broke yesterday. Next major news will be court appearances by Mr. Shaw this week and by Mr. London on 5-17.

Written by Jim Ulvog

May 7, 2013, 7:04 am at 7:04 am

Posted in Audits

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