Scott London, left, of KPMG, accepting payment from Bryan Shaw.
Scott London, left, of KPMG, accepting payment from Bryan Shaw. (Photo: Handout/FBI.)

The golfing buddy of a former KPMG LLP senior partner in Los Angeles was sentenced to five months in prison for making about $1.6 million in stock trades from insider tips.

Scott London, former chief of KPMG’s audit practice for the Pacific Southwest, was sentenced earlier this year to 14 months in federal prison for disclosing confidential information about public companies, including Herbalife Ltd. and Skechers USA Inc., to his friend, Bryan Shaw, in exchange for $70,000 in cash, concert tickets and a $12,000 Rolex watch.

U.S. District Judge George Wu, who imposed Shaw’s sentence on Monday, ordered him to surrender to federal authorities in August.

Prosecutors, acknowledging Shaw’s cooperation in the case, sought six months in prison, far below the guideline range. Shaw, who allegedly exchanged bags containing bundles of $100 bills with London on a side street near his jewelry business, had agreed to record telephone conversations for the FBI.

But prosecutors also insisted on prison time. “Defendant committed a serious crime—for nearly two years, he repeatedly traded based on inside information that he had secretly obtained from London, fully knowing that what he was doing was illegal,” they wrote in court papers.

Shaw, who pleaded guilty to one count of conspiracy to commit securities fraud a year ago , had asked for probation. His lawyer described him in court papers as a “fundamentally good person who has led an otherwise exemplary life.”

“As the court recognized in imposing a sentence well below the guideline range, Mr. Shaw has led a 53-year life marked overwhelmingly by honesty, integrity and hard work,” said Nathan Hochman, a partner at Bingham McCutchen’s Santa Monica office, in a prepared statement. “He made a serious mistake in getting involved in insider trading with Scott London but then did everything he could to right that wrong.”

In March, Shaw was a guest speaker at a corporate-fraud seminar at the University of Southern California Gould School of Law in Los Angeles, according to court papers.

Shaw, who is married with two children, wasn’t ordered to pay a fine. Last year, he agreed to pay more than $1.9 million to the U.S. Securities and Exchange Commission.

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