KPMG insider trading scandal caused by ‘lapse of judgment’

A former KPMG accountant has blamed a “lapse of judgement” for the insider dealing scandal that has cost him his job and sparked a federal investigation, reports The Guardian.

Scott London, the partner in charge of the audit practice for KPMG in southern California, was fired by the accounting firm on Monday after it emerged he had given insider tips on the accountant’s clients to an unnamed investor. London, 50, had worked for KPMG for 29 years.

KPMG has resigned as auditor of two companies, supplements firm Herbalife and Skechers, a shoe company, after London breached their confidentiality. The Justice Department and Securities and Exchange Commission are now investigating a case that is causing the accountancy firm major embarrassment.

“I have no idea what I was thinking. I don’t know why there was a lapse of judgment, but there was,” London said in an interview with the Los Angeles Times.

London said he barely benefited from his decision to tip off a friend about his clients, a friend who it appears then set him up with the Feds.

According to the LA Times, London met a friend at a Starbucks in the San Fernando valley for what he assumed was a casual coffee. The friend handed him an envelope containing $5,000 cash. Unbeknown to London, he was being photographed secretly by the FBI.

London told the LA Times he had given the friend information because the friend was struggling financially. In return, he reportedly received about $25,000 in cash, a new Rolex watch and fancy dinners.

At KPMG, London managed more than 900 workers and was “responsible for monitoring the mentoring and performance evaluation of the employees as well as the overall growth and quality initiatives within the audit practice,” according to his profile on the Directors’ Organization, a group for companies’ board members.