Previous post explained Mr. Scott London surrendered his CPA license as a consequence of his guilty plea to insider trading. This discussion will go through the timing of the disciplinary process and outline a few more well-deserved consequences Mr. London has earned.
The disciplinary order has the Accusation attached to it. Here’s the timing, which is interesting because I’ve never looked at one of these in detail.
The federal PACER system shows a plea agreement was entered on 7/1/13.
Complaint AC-2014-10 is dated 8/21/13. It contained three causes for discipline, all of which are rolled into the comments published in Update #74.
The stipulation agreement says that Mr. London admits all the accusations. In the harsh legal words used in such admissions:
Respondent admits the truth of each and every charge and allegation in Accusation No. AC-2014-10, agrees that cause exists for discipline and hereby surrenders his Certified Public Accountant License No. 46174 for the CBA’s formal acceptance.
Mr. London signed the stipulation on 10/15/13.
An Assistant AG for the state signed it on 10/28/13.
The disciplinary action was dated 11/27/13 and became effective 12/27/13.
Small dollar penalty –
If Mr. London were to apply for reinstatement of his license, he will have to reimburse CBA $1,637.50 for costs of the investigation. Since that is a conditional payment and I think it is unlikely he will reapply, that isn’t really a consequence. For one thing, if he reapplies, the settlement specifically says everything in it will be considered as a part of his request.
Legal costs –
Mr. London retained legal counsel to represent him in the disciplinary process. Usually malpractice insurance would cover the legal costs of a state investigation. I’m guessing that Big 4 partners don’t carry malpractice insurance as individuals. I think that means he paid this attorney out of his own pocket. It is separate counsel from the attorney who handled the federal criminal case. So you can count the legal costs for this action as another part of the earned consequences of his illegal behavior.
Quick action –
This action by CBA moved fast. The complaint was filed (8/21) about seven weeks after his plea deal (7/1). The negotiations for settlement were resolved in another eight weeks (10/15). The deal was official after about six weeks (11/27) and was effective a month later (12/27).
This moved fast. I would have guessed this might take a year or more for the disciplinary action to be finished. My guess on why it moved so quick is that Mr. London quickly agreed to surrender his license.
Self-identification in your job –
Here’s another consequence, this time in the emotional realm.
Many people get their identity from their work. This is even more so for men – us guys often get our sense of worth from our work. That’s why lots of guys have a real struggle when they retire. I’m guessing this is even more pronounced for those of us in professional fields.
Last fall, Mr. London signed away his professional credentials. He’s been an accountant since college and was a well-respected and well-compensated Big 4 partner for 18 years.
It’s a wild guess, but I’ll make a guess that he has a large part of his identity and self-worth tied up in being a CPA.
He signed that away on 10/15 and saw his license officially disappear on 12/27. That has likely caused a hurt that will take a long time to heal.
Please keep in mind I’m not complaining about his consequences or feeling sorry for him. He worked hard to earn every little bit of the consequences he is getting.
Why this discussion then?
This specific situation provides a great study for the rest of us about the consequences of our actions. I hope this will be a learning opportunity for all of us.
Full disclosure: Just so everyone knows, the California Board of Accountancy is the regulatory agency with oversight authority of my CPA practice. Also, I worked for KPMG for a few years, way back when it was call Peat, Marwick Mitchell.