Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Comments from Scott London interview – part 6

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This is the sixth in a series of posts describing comments in an interview of Scott London during a four-hour CPE session on June 26. The first post explained the goal of this series is to organize a number of comments in the session. The course was presented by The Pros & The Cons.

This post will cover a few stray comments in the interview.

Expectation of total amount of insider trading gains

As I mentioned earlier, Mr. London thinks he received around $50,000 total consisting of a combination of cash, concert tickets, and the watch which he thinks is worth perhaps $3000. If I misunderstood one or two key words in that comment and he thinks the amount is actually $70,000 total, it doesn’t change the key point. I think the key phrase indicated he thought the total was $50K.

Mr. London said he was told by Mr. Shaw that the payments would be one-third of the gains. Seems to me that would be a reasonable way to split the loot – one-third for taxes and one-third to each of them.

That would reasonably have led Mr. London to think that the total gains by Mr. Shaw were the range of $150,000 to perhaps $210,000.

That would explain his professed shock at finding the total gains were actually well over $1 million.

In his own defense

Several times Mr. London referred back to his quick confession and full cooperation.

He referred to multiple mea culpa comments already made in the interview and then said he thought his core personality came through by confessing immediately when confronted.

He contrasted this with baseball players who are accused of steroid use but deny it for months or years after everyone knows they did it.

Later in the interview he came back to this idea again pointing out he did the right thing by confessing. He realizes he has tainted the entire profession and the impact would have been even worse if he denied it and caused a long investigation.

He has a good point there. If the investigation had dragged out a few weeks with daily dribbles of news hitting the NYT and WSJ, along with rumors about a dozen other companies, the damage would have been severe.

Sentencing

Going into the sentencing, his attorney argued for 6 months incarceration with a request for home confinement. Mr. London says he knew it was a pipe dream to avoid jail.

While the judge was talking at sentencing, Mr. London was guessing the judge was thinking about 3 years. As the judge starting describing mitigating factors, Mr. London figured it would be much less than 3.

He perceives that the quick confession and full cooperation was a major factor in bringing down the sentence. Without that, the sentence would have been much longer.

Other consequences

When asked about his capital account, Mr. London indicated he has a confidentiality agreement and cannot discuss it.

A stray comment by his attorney in front of a camera makes me think that his capital account was closed as a settlement with KPMG.

He thinks his pension should be covered under ERISA and therefore he hopes it will be accessible to him later on.

Previous posts

Final post – prep for prison and life afterwards

Written by Jim Ulvog

July 21, 2014, 7:23 am at 7:23 am

Posted in Audits

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