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| English: FBI Mobile Command Center in Washington DC. (Photo credit: Wikipedia) |
New York, Apr.11, stock market trading .- The Los Angeles-area man who traded on confidential information provided by a former KPMG LLP partner at the center of a federal insider-trading probe is Bryan Shaw, his lawyer said.
Between 2010 and last year, Mr. Shaw "received non-public information from Scott London about a number of companies and then profited substantially from stock trades based upon that information," according to a statement he issued through Nathan Hochman of Bingham McCutchen LLP. "I cannot begin to apologize for my incredibly stupid actions. There is no excuse for my wrongful conduct."
Hanna Carp / The Wall Street Journal Scott London stands in front of his home in Agoura Hills, Calif.
Mr. London was fired Friday by KPMG after he admitted to investigators that he passed confidential information about audit clients Herbalife Ltd. and Skechers USA Inc. to a man he met at a golf club, who used the tips to trade stocks. The man hasn't previously been identified.
The Federal Bureau of Investigation, Justice Department and Securities and Exchange Commission are investigating trading in the shares of several KPMG corporate clients on the West Coast, according to people familiar with the probes.
Mr. Shaw is one of two partners in Shaw Diamond Co. of Encino, Calif., according to Dun & Bradstreet. Shaw Diamond didn't return a call seeking comment.
"I accept full and complete responsibility for what I have done and know that I will spend the rest of my life trying to make up for my tragic lapses of judgment," Mr. Shaw said in his statement, emailed to The Wall Street Journal. "Over the past several months, I have fully cooperated with the FBI, the SEC, and the U.S. Department of Justice in their ongoing investigation of this matter. I expect that my actions will result in significant civil and criminal consequences, but I realize that this is the painful price I will pay for my transgressions."
Mr. London vowed to stop providing Mr. Shaw with tips after Mr. Shaw's brokerage account was frozen, the ex-partner's lawyer said. The two realized they should stop the trading, said Harland Braun, a Los Angeles lawyer representing Mr. London, "So they stopped doing it."
But it was too late to prevent Mr. London from becoming the latest professional to be snared in the escalating drive against all forms of insider trading.
According to his lawyer, Mr. London decided to talk to the authorities after he was approached by the FBI in late March. He admitted his wrongdoing at a meeting last Wednesday with FBI investigators, Justice Department prosecutors and the SEC, his lawyer said.
The SEC and prosecutors wanted to know if the stock tips that Mr. London said he gave to his friend, who in turn gave him cash and gifts, were just a "tip of the iceberg," his lawyer said.
Mr. Braun said after that meeting, the government was satisfied that Mr. London had passed information to only one friend and he was the only KPMG employee involved in, or aware of, the tipping.
Mr. London alerted KPMG the following day, Thursday, that he had been passing tips to his friend over the last three to four years, according to his lawyer.
Within 24 hours, KPMG fired Mr. London, and on Monday the firm resigned as auditor to Herbalife and Skechers, whose audits Mr. London had overseen.
KPMG said in a statement Monday that the partner who was fired "violated the firm's rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG's long-standing culture of professionalism and integrity." The statement didn't name Mr. London.
Mr. London passed the tips about his clients in casual conversation with his friend, his lawyer said.
Although Mr. London "initially" wasn't aware that his friend was trading on the tips, he knew he was breaching his duty of confidentiality to his employer by sharing such information, Mr. Braun said.
He added that once Mr. London agreed to accept payment for the tips, "He was really compromised."
Mr. London worked at KPMG for 29 years. He said in an interview with The Wall Street Journal Wednesday that he became an accountant because his father was one and stayed at the firm his entire career because he loved the people there, and interacting with clients.
Interviewed in front of his home Wednesday afternoon, Mr. London wore a faded blue T-shirt and jeans and sipped a Dr Pepper. He said he was resigned to dealing with the aftermath of this week's revelations.
Mr. London, who said he had returned from setting up the field for his son's baseball team, said he "hopefully will get past" the trading episode. "I've made my bed," Mr. London said. "Now I just want to protect my family."
James Oberman, Michael Rapoport and Mark Maremont contributed to this article.Write to Jean Eaglesham at jean.eaglesham@wsj.com and Hannah Karp at hannah.karp@dowjones.com...
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