Bryan Shaw Case Summary

Scott London crossed a major ethical and legal line by helping Bryan Shaw with his tradings. “By providing Shaw with material, nonpublic information concerning KPMG clients, London breached a duty of trust and confidence that he owed to KPMG and the clients he audited” (U.S. SEC, 2013). In the beginning of their relationship, Shaw was simply looking for help from London as his jewelry store was struggling as a result of the economic downturn. In an interview, London claims that it all happened slowly. At first, the exchange was of public information that any investor would have access to in order to try to make successful trades. However, as time went on, Shaw needed better information to make money, and in result asked if London would share confidential information about his clients. The action of London releasing material nonpublic information to Shaw was the moment when he breached his ethical responsibilities as a CPA. Within the AICPA Code of Professional Conduct, it is stated that CPAs must act with integrity, and maintain a client's confidentiality. The code also indicates that the trust that is assumed between a client and a CPA is not to be compromised for the sake of personal gain or advantage. While London did not directly gain through illicit trading, he did profit by releasing client information and receiving monetary gifts from Shaw in return. Even though London was trying to help Shaw, he crossed the line by divulging significant confidential information regarding major clients, thus leading him to break the law.

This included cash, concert tickets, jewelry for his wife, and even a Rolex watch. However, this was an unusual case according to the judge, because London originally denied the payments from Shaw and the payments were insignificant compared to London’s salary as a partner at KPMG (Snyder,