Amanda Bronstad reports for The National Law Journal, an American Lawyer affiliate.

A former senior KPMG LLP partner in Los Angeles has been charged with passing confidential information about clients to a close friend in exchange for cash bribes.

In a criminal complaint filed on Thursday, Scott London, former chief of KPMG’s audit practice for the Southwestern United States, was accused of helping Bryan Shaw, the owner of a local jewelry business, obtain more than $1 million in illegal profits from the insider information. London was charged with one count of conspiracy to commit securities fraud through insider trading. Separately, the U.S. Securities and Exchange Commission filed a civil action against London and Shaw.

"The public has every right to fully expect a level playing field in our financial markets," said U.S. Attorney André Birotte in Los Angeles. "As alleged in the complaint, Mr. London chose to betray the trust placed in him as a financial auditor and to tip the trading scales for the benefit of insiders like himself."

London’s attorney, Harland Braun of the Law Offices of Harland Braun in Los Angeles, did not return a call for comment. Bingham McCutchen’s Nathan Hochman is representing Shaw in the SEC suit.

The SEC complaint included a statement tendered on Tuesday in which London regretted his actions and apologized to KPMG and his colleagues at the firm. "The Firm bears no responsibility in this matter. These actions were by my choice and mine only," he said. "Knowing that I have caused harm and embarrassment to those that I respected and admired in the Firm has caused me tremendous grief."

The charges come after KPMG abruptly resigned as auditor to Skechers USA Inc. and Herbalife Ltd., citing concerns that "the firm’s independence has been impacted as a result of" London’s actions, KPMG announced on Monday. The firm fired London.

"KPMG’s 22,000 partners and employees unequivocally condemn this individual’s rogue actions," the accounting firm wrote. "This individual violated the firm’s rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG’s long-standing culture of professionalism and integrity."

London had supervised more than 500 accounting professionals at KPMG and personally audited Herbalife and Skechers.

The criminal complaint alleged that Shaw received confidential information about impending earnings reports for Herbalife, Skechers and Deckers Outdoor Corp. from late 2010 to March 2013. In some cases, London read confidential information in press releases that wouldn’t be released to the public until two or three days later. He also relayed confidential information regarding pending mergers, specifically the sale of RSC Holdings to United Rentals Inc. and UnionBanCal Corp.’s purchase of Santa Barbara, Calif.’s Pacific Capital Bancorp.

In exchange, the complaint continued, Shaw gave London bags of $100 bills, wrapped in bundles of $10,000 each. He also gave him a $12,000 Rolex watch, jewelry and Bruce Springsteen concert tickets. The value was typically 10 percent of his profits from the illegal securities trades.

Once Shaw began acting as an FBI informant, he recorded phone conversations in February and March in which London told him about coming earnings reports for Herbalife and Deckers. During one call, he referenced rumors about Herbalife going private; if that happened, he told Shaw, "[t]hat is going to be where you make a ton of money." He suggested that, once he learned for sure whether Herbalife was going private, Shaw should "start just buying in small blocks, right, so it doesn’t draw attention and then, you know, then it doesn’t look unusual at all."

On February 21, London met with Shaw on a street corner in Encino, Calif., taking a black paper bag filled with $5,000 cash for his tips in Herbalife’s earnings report in February 2013, the complaint alleged. Later, on March 7, he met Shaw in a parking lot of a Starbucks in Woodland Hills, Calif., to receive another $5,000 bag related to tips on Decker’s February 2013 earnings announcement.

During a March 20 interview at his home in Agoura Hills, Calif., London told an FBI agent that Shaw was the only person to whom he had passed confidential information and that "there’s nobody else." Later, during an April 3 meeting with federal prosecutors, London said Shaw had paid him $50,000.

London was expected to make an initial appearance on Thursday afternoon in federal court in downtown Los Angeles. He faces up to five years in federal prison and a $250,000 fine.

According to the SEC’s complaint, filed in federal court in Los Angeles, London and Shaw had met at a country club years earlier and became golfing partners. London has said he provided information to Shaw, who was having financial problems because his jewelry business suffered during the recession.

On at least one occasion, London disclosed confidential information to Shaw while on a golf outing. Shaw, in an April 10 statement attached to the SEC’s complaint, apologized for his "incredibly stupid actions."

"There is no excuse for my wrongful conduct. I accept full and complete responsibility for what I have done and know that I will spend the rest of my life trying to make up for my tragic lapses in judgment," he said. "I expect that my actions will result in significant civil and criminal consequences, but I realize that this is the painful price I will pay for my transgressions."