Prosecutors in California have filed criminal charges against the former KPMG partner who was fired last week amid allegations of leaking confidential information about companies he audited.
Scott London, a KPMG veteran of nearly 30 years, is also facing civil charges filed by the Securities and Exchange Commission (SEC), the US market regulator, which also filed a civil complaint against Bryan Shaw, the alleged recipient of the leaked information.
According to the SEC, Mr London allegedly tipped Mr Shaw "with confidential details about five KPMG audit clients and enabled Shaw to make more than $1.2m [£780,000] in illicit profits".
The SEC's claim that Mr London leaked information connected to five companies significantly widens the scope of the case. Until this morning, Mr London was thought to have leaked information connected to just two companies: the nutritional products business Herbalife and the footwear firm Skechers USA. KPMG, which is not accused of any wrongdoing, has resigned as auditor to both companies.
But the SEC alleged that Mr London had also leaked information about Deckers Outdoor Corp, another footwear manufacturer. He is also said to have gained access to inside information about mergers involving two former KPMG clients – RSC Holdings and Pacific Capital.
The SEC said that in exchange for passing lucrative tips to Mr Shaw, Mr London allegedly received "at least $50,000 in cash that was usually delivered in bags" outside a jewellery store owned by Mr Shaw. Mr London is also alleged to have received a Rolex watch worth $12,000, among other gifts from Mr Shaw.
"London was honoured with the highest trust of public companies, and he crassly betrayed that trust for bags of cash and a Rolex," George Canellos, the acting director of the SEC's enforcement arm, said.
KPMG is the smallest of the "big four" international accounting firms, which also includes PricewaterhouseCoopers, Ernst & Young and Deloitte. Last year, it booked revenues of just over $23bn. Its audit revenues stood at $10.3bn.Reuse content