The friend who traded on insider trading tips provided by a former KPMG accountant is Bryan Shaw, his lawyer said late Wednesday.
Shaw, an Encino jeweler, used information about Herbalife Ltd. and Skechers USA Inc. to profit in the stock market. He got the tips from Scott London, a 29-year veteran partner at accounting firm KPMG in Los Angeles. The two were golfing buddies.
In a statement sent by his lawyer, Shaw said:
"During 2010 through 2012, I received non-public information from Scott London about a number of companies and then profited substantially from stock trades based upon that information. I cannot begin to apologize for my incredibly stupid actions. There is no excuse for my wrongful conduct. 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. 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."
The identity of Shaw was the missing piece in the accounting scandal that broke Tuesday when London and KPMG were caught up in an insider-trading scandal that rocked Wall Street.
The furor began late Monday when KPMG announced it had fired a high-ranking staffer, later revealed to be London. The accounting giant said the executive had allegedly been involved in insider trading of prominent companies whose audits he handled.
On Tuesday, those firms -- nutritional supplement maker Herbalife and footwear company Skechers -- said KPMG had abruptly resigned as their outside auditor because of the alleged misconduct.
Trading in stocks of the two local companies was temporarily suspended.
The Justice Department is investigating the insider trading allegations, people familiar with the matter said.
KPMG was approached by the Justice Department late last week and told that London, who was a partner in KPMG's office in downtown Los Angeles, was under investigation, according to a person briefed on the matter. London was fired less than 24 hours later.
The firm in a statement described the executive as a "rogue" employee who "acted with deliberate disregard for KPMG's long-standing culture of professionalism and integrity."
London, the partner in charge of audit services for KPMG's Pacific Southwest region, spent years working with Herbalife and Skechers, the Manhattan Beach company. He has been a certified public accountant since 1986.
In an interview with The Times on Tuesday, the 50-year-old said he couldn't explain why he shared the tips with his friend, alternately toggling between acknowledging his wrongdoing and describing the information he provided as bare-bones.
"Every day since this occurred I'm saying to myself how stupid I am," London said. "I have no idea what I was thinking. I don't know why there was a lapse of judgment but there was."
London said he barely benefited.
"I gained very little," London said. "He gained a lot and yet I bore all the risk."
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