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On Thursday, April 4, federal prosecutors and the Securities and Exchange Commission filed criminal and civil charges against fired KPMG accounting partner Scott London for conspiracy to commit securities fraud through insider trading. The accountant provided confidential information about KPMG audit clients Herbalife Ltd., Skechers USA Inc., Uggs maker Deckers Outdoor Corp., RSC Holdings and Pacific Capital to Bryan Shaw, a close friend, from late 2010 until last month.

1. How much did the accountant’s friend make on trades associated with these tips?
2. How long had the accountant worked for KPMG?
3. When Shaw expressed concerns to his accountant friend, what rationalization did the accountant give him about not worrying?
4. What was the final puzzle piece in this insider trading fraud?

Associated Press. (2013).Feds, SEC file criminal, civil insider trading charges against former KPMG partner. Washington Post, April 9 (Retrievable online at