By Pat Sweet, AccountancyLive

The Californian jeweller who made payments to a former KPMG senior audit partner in the US in exchange for confidential client information has agreed to plead guilty to insider trading as part of a plea agreement with US prosecutors.

Bryan Shaw gave Scott London, KPMG’s former head of audit for the Pacific southwest, at least $60,000 (£38,500) cash, a $12,000 (£7,700) Rolex watch and concert tickets in exchange for tips.

Under the plea agreement, Shaw will pay $1.27m (£820,000), which is roughly equal to the profits he made on the trades, and will also receive a reduced prison sentence.

Shaw and London were friends and golfing partners. According to US prosecutors, London gave tips to Shaw about trading in five companies over a two year period.

After a federal investigation into unusual activity on his brokerage account, Shaw agreed to cooperate with the authorities and recorded phone conversations in which he and London discussed trading on non-public information from the companies whose audits London oversaw. He was then observed handing an envelope containing $5000 (£3200) cash to London at a meeting in a car park.

At the time the news of London’s activities first broke, KPMG resigned from two audits, Herbalife, the nutritional supplement seller, and shoe manufacturer Skechers, saying ‘the firm’s independence had been impacted’.

London has also confessed publicly to insider trading and is due to appear in a US court on 17 May.