Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Admissions in Scott London’s plea agreement: felony insider trading 14 times

leave a comment »

Have you ever read a federal plea agreement for an individual? I’ve read court documents for criminal cases from the county where I live and civil cases at the federal level. This is the first individual criminal case from the federal level. Wow!

I just subscribed to the PACER system, which provide access to public documents in the federal court system. I’m still learning how to ride that bicycle. Looks like it will be quite useful.

One of the first things I looked at is the case of Mr. Scott London, most recently a senior level partner at KPMG, in charge of the southwest regional audit practice. As I’ve mentioned on this blog, he has pled guilty to insider trading.

The plea agreement is amazing. The phrasing is rather harsh and the admissions are exquisitely clear. I’ll share some of the things I noticed in this public document.

Admissions

In the written agreement, Mr. London admits he is guilty of insider trading and admits all the facts in Exhibit A.  The exhibit is written in a rather heavy-handed way. But Mr. London agreed. In writing.

By signing the agreement, he admits that between about October 2010 and about May 2012 he

knowingly and willfully engaged in a conspiracy … to commit securities fraud through insider trading.

Wow. No wiggle room there.

He admits to passing on information about each of the following SEC registered clients of KPMG:

  • Herbalife
  • Skechers
  • Deckers Outdoor Corporation
  • Pacific Capital Bancorp – acquired by UnionBanCal
  • RSC Holdings, Inc. – acquired by United Rentals, Inc.

Mr. London admits he provided confidential insider information to Mr. Shaw knowing Mr. Shaw would trade on the information.

Mr. London admits to passing inside information at least 14 times. Four specific incidents are explained in detail.

I think that means he admits, in writing, to 14 felonies. I suppose there could be more.

Other stray terms

Some items in the agreement are quite strong. I can’t imagine what the supervised release terms look like.

Mr. London agrees he will not contest any of the facts in the agreement.

He agrees not to seek discharge of any restitution order in bankruptcy. Not a big deal in this case but that could be a really big deal for someone hit with tens or hundreds of millions of dollars of disgorgement in a big Wall Street case.

The plea agreement reminds Mr. London that after the felony conviction he loses

  • the right to vote,
  • the right to possess a firearm or ammunition,
  • the right to hold office, and
  • the right to sit on a jury.

It will be a felony to merely possess ammunition.

He agrees he will not appeal the conviction or reasonableness of the fine or the sentence. He will accept any terms imposed by the judge.

Written by Jim Ulvog

February 6, 2014, 8:29 am at 8:29 am

Posted in Other stuff

Tagged with

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: