SCOTT London, a former senior partner with accounting firm KPMG, has agreed to plead guilty to securities fraud for his involvement in insider trading, according to an announcement from the US Attorney’s Office in Los Angeles.
London, 50, supervised more than 500 staff at KPMG and oversaw audits of Herbalife and Skechers USA, according to prosecutors. He faces a maximum term of 20 years in federal prison and a maximum fine of $5m (£3.3m) or twice the gross gain or gross loss resulting from his offense, according to the plea agreement.
London’s plea agreement comes about a week after his one-time golfing buddy Bryan Shaw pleaded guilty to one count of conspiracy to commit securities fraud for his role in the scheme. London and his lawyer were not available to comment.
Shaw, a jeweler, gave London cash, an expensive watch and other gifts in exchange for tips on Herbalife, Skechers and other companies that helped him generate more than $1m in illegal profits, according to prosecutors. Shaw sometimes gave London bags filled with cash at meetings on street corners and in parking lots, according to prosecutors.
In his plea agreement, London admitted that he gave Shaw inside information regarding at least 14 separate announcements by KPMG clients, including Herbalife’s 2 May, 2011 earnings announcement and United Rentals’ 16 December, 2011 announcement of its acquisition of RSC Holdings, according to prosecutors.
Shaw will pay around $1.3m in restitution and cooperate with the investigation as part of his plea.
London is scheduled to appear in federal court tomorrow, though that is likely to be delayed, according to the US Attorney’s Office in Los Angeles.
KPMG declined to comment.