Audits

On June 26, 2014, Scott London was interviewed in a four-hour CPE webcast on professional ethics.

The course was presented by The Pros & The Cons. The interviewers were Gary Zuene, CPA, Gaylen Hansen, CPA, and Michael Sallah of the Washington Post.

There are two published interviews that took place before the CPE session:

• 6/21 – Quentin Fottrell at Market Watch – Confessions of an insider trader on the eve of his prison sentence
• 6/16 – Walter Pavlo at Forbes – Fmr KPMG Partner Scott London Shares Cautionary Tale Before Prison

I’ve seen two articles discussing the interview:

• 6/25 – Michael Rapoport at Wall Street Journal – Prison-Bound KPMG Ex-Partner Remorseful for Insider Tips.
• 6/27 – Michael Cohn at Accounting Today – Former KPMG Partner Scott London Speaks out Before Starting Prison Term

This post will summarize some of the comments from that interview that I found to be of particular interest.

The goal of this series of posts is to get the interview comments organizing into related topics.

Context for this series

I am presenting my comments about the interview with only a few narrative statements. At some later point I will correlate this with other news reports.

I won’t comment now about my perceptions or how we interpret Mr. London’s comments. That is for another series of posts. Maybe.

How did the insider trading scheme develop?

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Comments from Scott London during interview – part 1Read More »

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 class – …

Additional consequences of insider trading – #13Read More »

Scott London was interviewed at length during a CPE webcast presented June 25, 2014. The class was presented by Gary Zuene, of The Pros & The Cons.

Mr. London was remarkably open.

He repeatedly accepted full blame for the insider trading. At several points he explained the context, pressures he was under, and actions by others (especially his golfing buddy) that help us understand the situation better. Each time he mentioned something outside of himself he again said that he is responsible. He is to blame.

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Interview with Scott London during CPE webcastRead More »

Two interviews of Scott London have appeared quite recently in advance of his marathon interview in a CPE class:

• 6/21 – Quentin Fottrell at Market Watch – Confessions of an insider trader on the eve of his prison sentence
• 6/16 – Walter Pavlo at Forbes – Fmr KPMG Partner Scott London Shares Cautionary Tale Before Prison

A few ideas from each of the interviews and a few of my observations.

Quentin Fottrell at Market Watch –

Mr. London perceives that insider trading is rampant.

He asserts he received about $50,000 in total, which includes the Rolex (which he rarely wore), and concert tickets.

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2 interviews with Scott LondonRead More »

Well, at least I think it will be the event to see. Next Wednesday, June 25, Scott London will be interviewed in a webcast presented by The Pros & The Cons.

To my recollection, all the previous interviews of Mr. London were brief events entering or leaving a court room. There have been a few conversations with reporters, but nothing in detail. This will be the first, in-depth interview I know of. Several hours will allow the time to give full, nuanced answers and explore follow-up questions.

Gaylen Hansen, former chair of the NASBA Ethics Committee will be the lead interviewer. Gary Zuene recently announced the Michael Sallah, investigative journalist from The Washington Post, has joined the interviewing team. Looks to be a great team of interviewers.

Block out 1 to 5 Eastern / 9 to 1 10 until 2 Pacific time for a 4 hour ethics class.

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CPE event of the year – 4 hour ethics class featuring interview with Scott LondonRead More »

After the sentencing of Scott London to 14 months in prison, KPMG issued me (and the rest of the world) a statement saying:

It was appropriate that Scott London was held accountable for the consequence of his illegal and unethical action.

As I mentioned earlier, there were some comments in public by Mr. London’s attorney that KPMG and Mr. London had worked out something through the partnership agreement. My guess is they closed out his capital account.

My guess at the time was that the sentencing cleared the path for KPMG to sue Mr. London. They would definitely have cause since the Herbalife reaudit cost around $15M, and they probably sent the bill to KPMG, who probably paid it quickly. I’ll guess that KPMG paid for the reaudit of the other two clients.

So, will KPMG sue Mr. London?

When I tweeted about my post, Francine McKenna followed up with a tweet saying something to the effect that this was the end of the case. Nothing else would be heard.

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Why KPMG won’t be suing Scott LondonRead More »

The sentencing documents are available on the federal PACER system for Bryan Shaw’s conspiracy conviction. Not really any new information. Did want to mention what is listed there. Also want to mention tracking info in the Bureau of Prison’s system for both Mr. Shaw and Mr. London.

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Minor details of Bryan Shaw’s sentencing for insider trading caseRead More »

Found some more comments from coverage of the sentencing for Scott London that change the perception of the hearing. At least it changes my perception. Mentioned this earlier here. Wish I had been in the sentencing hearing.

Look at the comments I mentioned earlier:

The Wall Street Journal – Former KPMG Partner Scott London Gets 14 Months in Prison for Insider Trading: …

More context on the sentencing hearing for Scott London. Why I am writing so much about this case.Read More »

Initial report at about 12:25 from CNBC: 5 months in prison.

Will update during day as more reports become visible.

Updates:

Reuters reports Jeweler who traded on ex-KPMG partner’s tips sentenced to prison. Report says five months in prison. No fine, in light of $1.9M already paid to SEC as penalty and disgorgement. Prosecution was only asking for $3K fine; that is a minor difference between $0 and $3K.

Los Angeles Times runs that infamous parking lot photo at top of article: Informant in KPMG insider trading case sentenced to 5 months in prison. The reporter, Riley Snyder, was obviously in court during sentencing provided some of the context you won’t otherwise see in reporting or transcripts:

Shaw, who was joined by several family members in court, fought through tears to deliver a handwritten apology to Wu before the sentencing.

You will never, ever see me again,” Shaw said, his voice quivering.

Post-Periodical – Encino Jeweler Sentenced for Insider Trading – Also, 3 years supervised release.

5:30 update – From the few stats available on my site, it looks like there are quite a few people clicking through to the articles linked above. Good. I’ll provide a few more:

The State – LA merchant gets prison for insider trading – This is the Associated Press version of the story, which will appear in many places. It is rather short. Won’t give any new info to anyone who has visited this blog, but is a good 20 line summary.

LA Business Journal – Insider Trading Co-Conspirator Sentenced – Extremely short summary – 12 lines.

6/3 update:

LA Times article by Riley Snyder updated at 7:01 p.m. – Bryan Shaw sentenced to prison in KPMG insider trading case.  A few new details.  The judge recommends a federal facility for nonviolent offenders, either in Lompoc or Taft.  Upland’s ex-mayor, John Pomierski, served his time in Taft. Mr. Shaw has 60 days to report, which would be about 8/2.

Update: Mr. Shaw released on 11/28/14 after serving 5 months.

 

UPDATE – sentencing coverage in this post.

The federal PACER system does not show any updates as of the evening of 6/1 that would change the scheduled sentencing of Bryan Shaw on 6/2 for conspiracy for his insider trading based on information provided by former KPMG partner Scott London. Scheduled for 8:00 a.m. on June 2.

The defense has filed a supplemental sentencing document that spells out in more detail the cooperation provided by Mr. Shaw. I read through it and glanced at the initial complaint against Mr. London. Here are a few highlights:

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Bryan Shaw sentencing watch. – Update on chronology.Read More »

On May 5, the presiding judge postponed sentencing from May 19 to June 2 for Bryan Shaw, who pled guilty to insider trading. He  based his trades on information provided by Scott London, formerly regional audit PIC for KPMG.

The U.S. Attorney is requesting 6 months in jail, 3 years supervised released, and a $3,000 fine.

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Sentencing date postponed for inside trader Bryan Shaw; Feds request 6 monthsRead More »