London discovered that he was the target of an investigation when the FBI came to his home and showed London a picture of him accepting cash, Braun said. London then spoke with investigators for three hours, admitting his role. Braun said that his client came to him chiefly concerned about protecting KPMG from the scandal's fallout. Braun maintains that London's honesty in admitting his sole culpability "saved the country from a stock market crash" that could have ensued if investors, spooked by the prospect that KPMG's audits were widely tainted, started selling off stock in many companies.
In a statement late Thursday, KPMG's CEO John Veihmeyer said he was "appalled" by the details that emerged in the complaint against London. He said that because of London's alleged actions, KPMG would step down as independent auditor of Herbalife and Skechers. But he added that there was no reason to believe the company's financial statements were inaccurate.
Veihmeyer said KPMG also planned to take legal action against London. "We unequivocally condemn his actions, and deeply regret the impact that his violations of trust and the law have had on our clients and our people," he said.
The SEC is seeking unspecified penalties and restitution against London and Shaw. The criminal charge against London carries a maximum penalty of 5 years in prison, and a fine of at least $250,000.
Special Correspondent Linda Deutsch reported from Los Angeles. Rexrode reported from New York.
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