Guilty Plea Entered in Insider Trading Case Involving Agoura Hills Man

Encino business man Bryan Shaw agrees to plead guilty and admits to plotting with Agoura Hills resident, businessman Scott London to commit securities fraud.

An Encino jewelry store owner was charged today with receiving insider information from a former KPMG senior partner and using the tips about such Southland companies as Herbalife and Skechers USA to make illegal stock trades that generated over $1 million in illicit profits.

Bryan Shaw, 52, of Lake Sherwood was charged in U.S. District Court with one count of conspiracy. In a plea agreement also filed today, Shaw agreed to plead guilty to the felony offense and admitted that he plotted with Scott London to commit securities fraud, according to the U.S. Attorney's Office.

As part of the agreement with federal prosecutors, Shaw agreed to give up more than $1 million in illegal stock trading profits, according to court papers.

Shaw was expected to make his initial appearance later this week in Los Angeles federal court.

According to the plea agreement, Shaw conspired with London to violate federal securities laws by using insider information to make illegal stock transactions in publicly traded companies.

London, 50, of Agoura Hills was charged last month with one count of conspiracy to commit securities fraud and is scheduled to be arraigned May 17.
He was arrested by federal authorities on April 5 and fired the same day by KPMG.   

The federal investigation led to a temporary halt in trading of Herbalife and Skechers USA shares on April 9.

"These two men were close friends who shared dinners, concerts, sporting events and secret information that brought profits to each of them,'' U.S. Attorney Andre Birotte Jr. alleged. "London provided, and Shaw was all too happy to use, proprietary information that should have remained confidential. These men broke ethical rules and criminal laws for the sole purpose of lining their pockets with illegal profits.''

Documents filed in the case against Shaw, as well as the 24-page affidavit in support of the criminal complaint in London's case, outline how London provided Shaw with confidential information about KPMG clients, and how Shaw used that information to make trades that generated the illegal proceeds.

London was a senior partner at KPMG who supervised hundreds of accounting professionals at the firm and personally handled audits for major KPMG clients, including Herbalife Ltd. and Skechers USA Inc. As a result of his position, London had access to confidential information about KPMG's clients before that information was disclosed to the public, according to federal prosecutors.

Shaw began to cooperate with the government's investigation in February.

London's criminal conduct continued until March, when he was recorded in telephone conversations passing highly sensitive and confidential information
to Shaw regarding upcoming earnings announcements for KPMG clients Herbalife and Irvine-based Deckers Outdoor Corp., federal prosecutors allege.

During the course of the scheme, London, in some instances, called Shaw two to three days before news releases were issued for KPMG clients and read confidential information from the draft releases to Shaw, court documents allege.

Prosecutors allege London also revealed to Shaw confidential information about impending mergers concerning KPMG clients before that information was made public. At times, London even discussed with Shaw how to structure Shaw's
purchases of the stock in certain companies in order to protect them from being
discovered, according to the U.S. Attorney's Office.

According to Shaw's plea agreement, he gave London more than $60,000 in
cash in exchange for confidential information about KPMG's clients, typically meeting with London near Shaw's jewelry store to give him bags containing
stacks of $100 bills.

Shaw also acknowledged giving London a $12,000 Rolex Daytona Cosmograph
watch, as well as jewelry and concert tickets, in exchange for the confidential
information, according to prosecutors.

Handsomish May 07, 2013 at 01:56 PM
Where's the penalty? Oh, I got caught, here's your money back. What is the deterent to the next person who want to do this? It should hurt them when the commit a crime. Double the amount of what they gained, and seize their property until it's resolved. Then charge them for the investigation and court costs on top. And then give them a little jail time as well. It doesn't have to be some long stretch, but at least enough time so they can realize that they are criminals.
Laura Gould May 07, 2013 at 03:32 PM
I doubt if the Shaw/London scheme is isolated. Scott London was too cavalier about providing non-public info to Shaw. Others must have profited in the past. No one risks an almost 60 year career for $60,000, a Rolex watch & some concert tickets. That's less than a big 4 partner yearly bonus. According to the SEC complaint, London disclosed noon-public info in the presence of others on a golf outing. I suspect that some members of London and Shaw's tight knit golf club, at North Ranch Country Club, also profited.
John May 07, 2013 at 04:18 PM
Unfortunately being convicted of a "white collar" crime only results in a slap on the hand. That needs to change but when those that are responsible for it are the same that contribute to our political candidates on both sides, nothing is going to change.


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something