Scott London, a former senior partner with accounting firm KPMG whose clients included Herbalife Ltd. and Sketchers USA, pleaded guilty before a federal judge in Los Angeles to a charge of securities fraud arising from his involvement in insider trading.
London, 50, who supervised more than 500 accounting professionals at KPMG, faces a maximum of 20 years in federal prison and a maximum fine of $5 million or twice the gross gain or gross loss resulting from his offense, according to the plea agreement.
The accountant admitted that he gave jeweler Bryan Shaw inside information regarding at least 14 separate earnings announcements or acquisitions by KPMG clients. The information included Herbalife's May 2, 2011, earnings announcement and United Rentals' Dec. 16, 2011, announcement of its acquisition of RSC Holdings, according to prosecutors.
London was accused of taking cash, concert tickets and jewelry, including a Rolex watch, from his one-time golfing buddy Shaw, who prosecutors say pleaded guilty earlier.
"I never did it for the money. I never asked for it, he gave it to me and I took it," London said in an interview after the hearing. "I did it to help someone whose business was struggling. It was a bad, bad mistake."
Shaw received $1.27 million in illegal profits, according to prosecutors, although London said he received only $50,000 and thought the profits were closer to $200,000. He said no one else at KMPG was involved.
London pleaded guilty before U.S. District Court Judge George H. Wu. He is scheduled to be sentenced on Oct. 21.
© 2014 Thomson/Reuters. All rights reserved.