Meet The KPMG Partner Who Allegedly Leaked Secret Client Data To The Highest Bidder

The KMPG partner at the heart of today’s Herbalife/KPMG fiasco was unknown for several hours, until finally his name resurfaced. Per Reuters: “Scott London, a partner at accounting firm KPMG, was the lead auditor for Skechers USA Inc who resigned after allegedly leaking insider information to traders, said Skechers Chief Financial Officer on Tuesday. In an interview, CFO David Weinberg said he was surprised to learn late on Monday from partners at KPMG that London had admitted to the allegations and was leaving the firm.”

And from the WSJ:

KPMG said late Monday that the partner had allegedly provided inside information about its clients to someone who had used that information in stock trading. That person wasn’t connected with the battle between Messrs. Ackman and Icahn over Herbalife, said a person familiar with the situation. The recipient of the alleged insider information hasn’t been named.


KPMG didn’t name the partner involved in the allegations, whom it described as in charge of its audit practice in its Los Angeles business unit.


KPMG partner Scott London headed the audit of Herbalife for the accounting firm. Mr. London didn’t immediately respond to requests for comment.

Introducing Scott (Via LinkedIn). We are confident the SEC, FBI and the DOJ (long after the fact) will be delighted to make an acquaintance.

Bloomberg’s Jon Weil did some more sleuthing and found out that Scott London…

… also has an interesting side gig: Chairman of the Los Angeles Sports Council. The nonprofit describes its mission as “the promotion of spectator sports programs in the Los Angeles and Orange County area, including support of our local teams and the attraction of events to the area.”


Here’s where that connection gets curious. Look on the left-hand column of the sports council’s website, under the heading “Supporting Our Local Teams,” and you’ll see a list of logos and names, including Major League Soccer’s Los Angeles Galaxy. And what’s the first thing you notice when you click on the Galaxy? Herbalife and its logo are all over the team’s website, including across the front of the Galaxy players’ jerseys. That’s because Herbalife, which sells nutritional supplements, is the team’s main sponsor.


Yet perhaps there was another reason for investors to wonder about KPMG’s independence from Herbalife, or at least the appearance thereof: London is chairman of an organization that, quite literally, is a cheerleader for a professional sports franchise that is inseparable from Herbalife and its brand.

Maybe there was a connection between London and Herbalife after all…

One wonders if following the demise of expert networks in late 2010 as a legitimate source of paid inside information, the hedge fund community realized there is a just as eager, and potentially cheaper source, of insider info on companies they want to buy or sell. And that source just happens to be partners (disgruntled or otherwise), and other staffers at Big 4 accounting firms.

One also wonders just how deep the rabbit hole revealed by Scott will be, and just how many hedge funds are exposed to have generated “alpha” thanks solely to the information provided by Scott and others like him.

We can’t wait to find out.


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