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Deckers Outdoor Corp. emerged Thursday as the third of five companies whose financial data was allegedly leaked by former KPMG partner Scott London to help pad a friend’s coffers.
The Securities & Exchange Commission said in a statement Thursday that federal prosecutors in Los Angeles had filed criminal charges against London, as well as Bryan Shaw, who profited by trading stocks of companies using non-public information provided to him by London.
According to the SEC’s complaint, London was the lead partner on several KPMG audits including Herbalife and Skechers USA Inc., and he was the firm’s account executive for Deckers. London also gained access to inside information about impending mergers involving two former KPMG clients, RSC Holdings and Pacific Capital.
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According to the SEC, Shaw made at least $1.27 million in illicit profits trading ahead of earnings or merger announcements. Shaw, who lives in Lake Sherwood, Calif., routinely traded at least a dozen times on the inside information he received from London, grossing profits of more than $714,000 from trading based on confidential financial data about Herbalife, Skechers and Deckers.
Meanwhile, in exchange for the illegal trading tips, Shaw paid London at least $50,000 in cash that was usually delivered in bags outside of Shaw’s Encino, Calif., jewelry store. Shaw also gave London an expensive Rolex watch, as well as other jewelry, meals and tickets to entertainment events, the SEC said.
The two men met at a country club several years earlier and became close friends and golfing partners. London has said he provided the inside information about his clients to help Shaw overcome financial struggles after his family-run jewelry business began faltering in the economic downturn.
Deckers declined to comment when contacted by Footwear News. It is possible it will decide, as did Skechers, to no longer employ KPMG as its independent auditor.
The Goleta, Calif.-based firm’s shares closed about 1 percent higher, at $59.08, on Thursday. The Dow Jones Industrial Average and the S&P 500 also climbed to fresh all-time highs after data showed jobless claims dropped more than expected.
Check back at Footwearnews.com for more updates.