This is the fifth in a series of posts describing comments in an interview of Scott London during a four-hour CPE session on June 26. The first post explained the goal of this series is to organize a number of comments in the session. The course was presented by The Pros & The Cons.
In the interview, Mr. London said he is still working through the issues that led him to do this. The underlying factor is a behavioral issue inside of him. He insisted it has nothing to do with the KPMG system.
At the point that sharing transitioned from public to nonpublic information, Mr. London thinks he was responding to the appeal of human nature to help a friend in need once in a while. There was a definite slippery slope. In the midst of these comments Mr. London was clear that he took the blame.
Mr. London was asked what was going through his mind during the time his passing nonpublic information. Mr. London indicated he knew it was wrong but it didn’t rise to the level of something that actually changed his behavior. He did not focus on the risk. Even now is not sure why. Possibly it is because the dollar amounts involved were small and he didn’t think he would get caught.
As an aside, this is consistent with a comment in the criminal complaint that Mr. Shaw said Mr. London said in July 2012 after Fidelity closed Mr. Shaw’s account. Mr. Shaw claims the comment was that insider trading is like counting cards in Las Vegas. They can’t prove you did it so they will only ask you to leave the casino.
Back to the interview.
Mr. London indicates that he was under a lot of pressure at the time. He said if you’re going through an adverse situation you need to consider whether that’s leading you to do something wrong in a different area. Lots of pressure in one area of your life can create impaired judgment in another area of your life. You could make poor decisions as a result.
It is important to note that even though there were a number of comments trying to share ideas about motivation and thought process, at no point did Mr. London suggest any of the blame belongs anywhere other than himself. In the context of an interview there will obviously be questions to probe motivation and why this was done. Answering the questions put to him doesn’t take away from the large number of times he took full responsibility for what happened
He indicated there were warning flags in his work life, but declined to give details during the interview.
He came back to that point and said there was something going on between him and leadership at the time.
Mr. London did volunteer he has spent three or five sessions with a psychologist with each session lasting two hours. He went through a 500 question personality quiz. He shared that the results indicate he did not do this for greed. The quiz did identify some personality flaws, but he did not share what those were. He did volunteer that perhaps there were some burnout and tenure issues. I’m not quite sure what that means.
By the way, I would never, ever share the results of any such a personality test with anyone, nor share I was going through counseling to sort through why I had done something foolish. Mr. London is quite brave to have shared as much as he did.
These comments are consistent with what was mentioned in an interview with Walter Pavlo: FMR KPMG Partner Scott London Shares Cautionary Tale Before Prison. In that interview Mr. London attributes the failure to two factors. The desire to help a friend and long tenure. He was in one position for too long.
The irony to me, looking in from the outside, is that he was in the dream position of a lifetime for most CPAs who work in the audit area. Ask the technicians you know if they wouldn’t eat up every second of time working as the regional audit PIC. For tons of CPAs, life couldn’t get any better than that.
For someone who enjoys auditing, that would be the most wonderful job imaginable. For those of you who loooove tax – think what it would be like to sit in the office of the regional tax PIC.
The editor over at Going Concern raised the idea of self-sabotage. I don’t know about that, but it is something to think about.
- Other posts in this series:
- Part 1 – context for this series; how did the insider trading scheme develop
- Part 2 – the payoff; a quiet time
- Part 3 – the sting; was the sting necessary
- Part 4 – the worst day of his life
- Part 5 – motivation (the post you are currently reading)
- Part 6 – other comments
- Part 7 – prep for prison and life afterwards
Next post: other comments in the interview – one more after that