Los Angeles-area jeweler Bryan Shaw was sentenced by a federal judge on Monday to five months in prison for his role in an insider trading case involving former KPMG LLP senior audit partner Scott London.
US District Judge George Wu shaved a month off the prosecution’s recommendation for a six-month sentence, according to a Los Angeles Times article. Shaw’s lawyers argued in favor of a lower sentence due to the jeweler’s valuable cooperation and lack of criminal history. But Wu said that would set the wrong precedent for others involved in insider trading, according to the article.
Shaw, 53, who pleaded guilty to one count of conspiracy on May 20, 2013, received confidential client information and stock tips from London that helped him make at least $1.6 million in illicit profits over a two-year period. In return, Shaw gave London more than $50,000 in cash and gifts, including a $12,000 Rolex watch.
Wu sentenced the 51-year-old London to 14 months in jail on April 25. London, who pleaded guilty to insider trading last year, will report to a federal minimum security prison in California on July 18.
London provided Shaw with inside information about such clients as Herbalife Ltd. and Skechers USA Inc. to help his friend and golfing partner overcome financial struggles after his family-run jewelry business began faltering in the economic downturn. Shaw received nonpublic company information several times from London between October 2010 and May 2012.
London was the lead partner on several KPMG audits, including Herbalife and Skechers, and he was the firm's account executive for Deckers Outdoor Corp. London was able to obtain confidential information about these companies prior to their earnings announcements or release of financial results.
Shaw grossed profits of more than $714,000 from trading based on the confidential financial data about Herbalife, Skechers, and Deckers, according to the US Securities and Exchange Commission (SEC).
London also gained access to inside information about impending mergers involving two former KPMG clients – RSC Holdings and Pacific Capital. Shaw made nearly $192,000 by purchasing RSC Holdings stock the day before its December 15, 2011, merger announcement. He also made more than $365,000 in illicit profits by purchasing Pacific Capital securities prior to a merger announcement on March 9, 2012, according to the SEC.
The scheme fell apart after regulators became suspicious of Shaw’s well-timed trades. He cooperated with investigators last year, wearing a recording device during meetings with London while FBI agents listened in.
According to the Los Angeles Times, Shaw, who was joined by several family members in court on Monday, fought through tears to deliver a handwritten apology to Wu before the sentencing.
“I assure you that you will never, ever see me again,” Shaw said, according to the article.