Your ‘Tipping’ is not welcome here!

Accountants are regularly exposed to material, non-public information regarding their clients’ financial results, pending corporate transactions, regulatory or legal actions as well as product and technology developments.  This inside information which can have a positive or negative impact on the value of a business must be treated with the highest ethical standards.

As defined by the SEC, Accountants, lawyers and other third parties are clearly insiders and are prohibited from using inside information to trade in the company’s securities or provide the information to others.  It is equally important to emphasize that tipping, sharing the information with others who will use it to their benefit, is as serious as trading on inside information itself, and that the penalties are just as severe.  The use of inside information is not only a violation of the US and foreign securities laws, but is also prohibited by an accountant’s fiduciary or contractual duties to clients and is a breach of the public trust.

Most recently, Scott I. London, a former senior partner with the accounting firm KPMG whose clients included Herbalife and Skechers USA, pleaded guilty on July 1, 2013 before a federal judge in Los Angeles to a charge of securities fraud arising from his involvement, tipping, in insider trading.  Mr. London, 50, who supervised more than 500 accounting professionals at KPMG, faces a maximum of 20 years in federal prison and a maximum fine of $5 million, according to the plea agreement.  It should be noted that Mr. London did not trade on the information himself.  Mr. London admitted that he gave the jeweler Bryan Shaw inside information regarding at least 14 separate earnings announcements of acquisitions by KPMG clients.  The information included Herbalife’s earnings announcement on May 2, 2011, and an announcement by United Rentals on December 16, 2011, on its acquisition of RSC Holdings, according to prosecutors.  Mr. London was accused of taking cash, concert tickets and jewelry, including a Rolex watch, from his onetime golfing buddy Mr. Shaw, who pleaded guilty earlier.  “I did it to help someone whose business was struggling,” Mr. London said in an interview after the hearing.  “It was a bad, bad mistake.”

As obvious, wrong and as publicized as this behavior is, the graph below shows that insider trading enforcement actions at the SEC remain at high levels and in fact are trending higher:

A bar graph showing the number of insider trading enforcement actions brought by the SEC each year from 2004 to 2008. In 2004 there were 42 cases, in 2005 there were 50 cases, in 2006 there were 46 cases, in 2007 there were 47 cases, in 2008 there were 61 cases, in 2009 there were 37 cases, in 2010 there were 53 cases, in 2011 there were 57 cases, and in 2012 there were 58 cases.

If you are looking for a trusted accounting firm embracing the highest ethics in the industry, please contact me, Christine Meder at Christine Meder’s Accounting Advisory Services at mederchristine1526@gmail.com to schedule a free 30 minute consultation or tweet me at @christinemeder1.  #unrbrand

Advertisements

About Christine Meder
Leveraging my insights and professional experience of 25 years in the accounting profession, I and my firm Christine Meder's Accounting Advisory Services provide our high net worth clients expert advice on their business activities and investments. In addition to performing traditional accounting functions in a confidential manner, I pride myself in giving clients a competitive edge whether it be in running their businesses or managing their investment portfolio. My studies leading up to completion of the EMBA program at the University of Nevada, Reno this August provide me with latest skills and techniques utilized across a broad spectrum of business functions. This breadth of education is complemented with experience as an accountant in the construction, mining, real estate and technology fields during my career. If you are looking for a trusted adviser or consultant in addition to someone you can rely on to properly keep your books, please contact me.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Habif, Arogeti & Wynne, LLP

Certified Public Accountants and Business Advisors

Small Private Equity Firms and Funds (SPEFFs)

Financial Reporting Discussions, Advice and Resources for Small Private Equity Firms and Funds (SPEFFs)

The SBS Group Blog

SBS Group's home for Microsoft Dynamics 365, ERP and CRM, Business Intelligence, Office Productivity and Cloud news, tips, tricks and more!

GordonCPA's Blog

Established in 1954, Gordon Advisors, P.C., is one of Michigan’s leading public accounting and business consulting firms.

Taxlady23 From My Office to Yours

Helping you create a positive and productive professional life...

Grumpy Old Accountants

An accountants insights on financial markets & corporate earnings...

The Survival Place Blog

Surviving The World As We Know It

Accounting & Bookkeeping Solutions

Accounting and Bookkeeping Services in Brisbane and Gold Coast

the ELLIOTT WAVE lives on

OEW: an Objective approach to the Elliott Wave Theory

Stock Pickr Blog

Maneuvering the Stock Market 1 Pick at a Time

Christine Meder's Accounting Advisory Services

Financial markets commentary with Accounting and Earnings emphasis

%d bloggers like this: