Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Additional consequences of insider trading – #13

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On June 25, 2014, Scott London was interviewed at length in a webcast presented by The Pros & The Cons.  During the interview, Mr. London shared several more aspects of the consequences of his illegal insider trading.

Add the following items to the long list of consequences of illegal behavior.

Knowing you will be a case study decades into the future – After one interviewer mentioned this would be a great case study for the Harvard Business Review, Mr. London said he knows that will be the case. He hates to be the subject of case studies but doesn’t think there would be a better example.

Embarrassment for your child during a college classMr. London’s older child, a daughter, is studying accounting. One day in class they were discussing ethics with Mr. London’s situation as the topic of the day.

Great.

Mr. London’s daughter gets to sit in class as they discuss the foolishness of her dad. Imagine having your daughter sitting through a discussion of how stupid and foolish your dad is and wondering how long he’s been doing this illegal stuff and some of the students sure do hope he gets a lot of jail time.

Just imagine the number of times his daughter will hear the comment over the next 20 years: “Nice to meet you.  London.. London… Are related to that guy from KPMG?”

Embarrassment for your extended family – Mr. London’s brother was recently playing racquetball with a buddy. The buddy was joking around, wondering on the court how his brother will look in zebra stripes.

Those close to you get to tell you how stupid you were – Shortly after the visit from the FBI, Mr. London explained the whole situation to his wife, who had no clue what was going on. At the end of the explanation her comment was “that’s the most stupid thing you’ve ever done.”

When he explains things to close friends the usual comment is to say something like “that was stupid.”

Comment from one person was “What the h*** were you thinking?”

Extended financial consequences – Mr. London indicated that with a felony conviction he will not be able to refinance his house. I wasn’t aware of that, and hadn’t thought about it, but it makes sense. That would be a pretty severe risk factor for anyone who’s looking at a credit decision.

There’s no place to park your investments – He indicated he was asked (I doubt it was much of a request) to close his investment accounts. So where would you move your investments? How could you ever hold mutual funds, stocks, or bonds again if no one will let you open an account?

Harm to charities you believe in – You serve on a charity’s board of directors because you believe in their cause and want to help them. Mr. London was asked to resign all of his board memberships. Each of those charities has also suffered direct consequences. He did not go into details, but the publicity of his illegal behavior hurt the charities he believed in.

The consequences of criminal behavior just keep piling up.

The full series of posts on insider trading consequences are available here.

By the way there is another rebroadcast of the interview at  4 PM Eastern time on June 30 .

Written by Jim Ulvog

June 29, 2014, 15:51 pm at 3:51 pm

Posted in Audits

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