Scott London, a former auditing partner at global accounting firm KPMG, pleaded guilty to an insider-trading charge Monday, admitting that he revealed confidential information about the firm’s clients to a friend.
London, 50, who told reporters after entering the guilty plea, that it was "probably the worst day of my life," was charged with one count of securities fraud in a U.S. District Court in Los Angeles.
London admitted that he passed tips about planned acquisitions and other secret trade information about KPMG’s clients such as Herbalife Ltd.( NYSE:HLF) and Skechers USA Inc.( NYSE:SKX) to his friend Bryan Shaw, an Encino jeweler, with the knowledge that such information would be used by Shaw for trading in stocks.
However, London claimed that he did not reveal the information for money, but was helping a friend. He said the money he received from the deal "was not material to my income level."
"I didn't do it for money," London said. "I did it to help out someone whose business was struggling. It was a bad, bad mistake."
The former senior partner at KPMG said he received about $50,000 in cash payments, a $12,000 Rolex Cosmograph Daytona watch, and jewelry from Shaw for the tips.
London, who tipped Shaw off about 14 times, according to Assistant U.S. Attorney Jim Bowman, who prosecuted the case, helped the jeweler earn about $2 million in trading profits in the years between 2010 and 2012.
Shaw, who admitted giving London thousands of dollars in return for information about KPMG's clients, pleaded guilty to a conspiracy charge in May, and is due to be sentenced on September 16.
The fraud came to light when auditing services giant KPMG, in April, revealed that one of its senior partners had revealed sensitive information about some of its clients to a stock trader. The firm later withdrew from providing auditing services to Herbalife Ltd. and Skechers.
"Imagine what you do, you do it for 30 years, you go to school for it, and in a matter of weeks it's all gone. It's my fault," London, who now faces a maximum sentence of 20 years in prison, said, according a Los Angeles Times report.