Federal prosecutors say phone and brokerage records show that former KPMG senior auditor Scott London and golfing buddy Bryan Shaw spoke by telephone several times in advance of significant news in companies that were clients of KPMG. After the news broke, Shaw made trades that generated $1.245 million in profits. Here are some examples:
Shaw purchases Herbalife shares and call options (a bet that the stock will rise) after a number of telephone calls with London from March to April 2011.
On May 2, 2011, the company reports record fiscal first-quarter earnings; shares rise 13%.
Shaw sells his options from May 3 to May 24, generating about $450,000 in profit.
On Dec. 14, 2011, Shaw buys shares in the equipment rental company after telephone calls with London.
On Dec. 16, 2011, RSC announces it is being acquired by United Rental Inc.; RSC shares jump nearly 58%.
Shaw sells his shares from Dec 19 to Dec 21, generating more than $190,000 in profit.
Pacific Capital Bancorp