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Minor updates on insider trading fiasco at KPMG including more consequences

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Since we are all anticipating the expected sentencing on Thursday for Mr. Scott London, regional audit PIC, lately of KPMG, here’s two tidbits I’ve noticed over the last few months but haven’t mentioned previously. Cost of re-auditing Herbalife will drop into the category of earned consequences when KPMG gets around to suing Mr. London. In older news, Mr. London updated his LinkedIn profile.

10/7 – LinkedIn profile: Mr. London is exploring other opportunities now that his status is “retired.” His LinkedIn background admits a few blemishes in his work experience:

Well, a lot has changed over the last year. After making a mistake that cost me my career with a Big 4 accounting Firm and I am looking forward to starting over again. (sic for clumsy phrasing) While I have lost credibility (deservedly so), there is a lot that I have to offer future employers. …

Yes, I regret my past actions this year, but I am looking forward to a future in which I can assist another company as they address the challenges in business today.

As of 2/24 those comments are still on the profile except for the sentence about losing credibility. That’s been deleted. Not that there is any near-term need for finding another employer, but that is a bit much.

Only item listed in experience is Partner at KPMG US from July 1995 through March 2013. Attended Cal State Northridge, graduating in 1984. Job title is ‘Financial Consultant.’

He has 357 connections, which probably aren’t particularly useful now, since everyone at KPMG is prohibited from having any contact with him. Connections at former clients probably won’t be replying to any messages.

Cost of reauditing Herbalife

12/16 – Wall Street Journal – Herbalife says “No Material Changes” Found in Reaudit – Last paragraph says PwC charged about $15 million to reaudit three years of financials.

My guess?  Herbalife sends a copy of the bill to KPMG who then writes a check in return for an unconditional release. Or maybe they just send a check to avoid a few extra days of legal fees.  KPMG then sits on the bill until all other proceedings against Mr. London are done and then sues him to recover the $15M.

Now we can quantify that part of the well-earned consequences from Mr. London’s insider trading.

Other recent posts:

UPDATE on sentencing date here.

Written by Jim Ulvog

February 25, 2014, 7:27 am at 7:27 am

Posted in Audits

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