A Los Angeles-area jeweler has been formally charged with making illegal stock trades based on secret information obtained from a senior partner at the accounting giant KPMG.
Prosecutors unveiled charges in Federal District Court in Los Angeles on Monday against the jeweler, Bryan Shaw, who has agreed to plead guilty to conspiracy to commit securities fraud. He will disgorge about $1.3 million in illicit trading profits.
Mr. Shaw, 52, who is not expected to make a court appearance until later this week, has been cooperating with the government, helping them build their case against his friend Scott I. London, the former KPMG executive.
Last month, both men publicly confessed to their misconduct after prosecutors charged Mr. London with leaking to Mr. Shaw confidential financial data about his clients, including the companies Herbalife and Skechers USA. Though not criminally charged until Monday, Mr. Shaw was already named in a related civil lawsuit brought by the Securities and Exchange Commission.
Mr. Shaw turned against Mr. London earlier this year after F.B.I. agents confronted him with evidence of insider trading. Prosecutors caught wind of the illegal activity after Fidelity Investments notified the authorities about unusual trading activity in Mr. Shaw’s account.
Over a period of weeks, Mr. Shaw recorded telephone calls and meetings with Mr. London. In one instance, as part of a sting operation, the F.B.I. photographed Mr. Shaw handing Mr. London a paper bag with $5,000 in cash.
“He viewed it as an unfortunate but necessary part of the process to making things right,†said Nathan J. Hochman, a lawyer for Mr. Shaw, last month.
Mr. Shaw, who was close friends with Mr. London and a frequent golf partner, acknowledged giving Mr. London more than $60,000 in cash in exchange for tips about KPMG’s clients. Mr. Shaw also game him a $12,000 Rolex Daytona Cosmograph watch, other jewelry and tickets to a Bruce Springsteen concert.
