Scott London Case Summary

Decent Essays
According to an interview conducted by MarketWatch with London, he confessed that he was just thinking about trying to help out a friend. He thought what they were doing was small. He claimed he didn’t ever want anything. Nor did he know the volumes Shaw was trading at.

London attributed his wrongful acts to poor judgment, saying he resisted at first when Shaw gave him something in return, but ultimately Shaw insisted and he took it.

London’s alleged activity paints a disturbing picture in which confidential information was compromised for personal greed at the expense of the investing public.

What was undoubtedly frustrating to our firm is that London committed these crimes even though he regularly received ethics training that explicitly prohibited employees from disclosing inside information regarding clients.

The problem is
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This could limit the amount of employees who possess the inside information, and therefore reducing the risk of insider trading; and could narrow down the suspicious employees to investigate in the event that there is sign of insider trading.

• Our firm should establish a hotline to allow employees to report suspicious behavior, even if anonymously. The existence and advertisement of a hotline will not only provide the firm with more “eyes and ears,” but will also help deter employees from engaging in wrongdoing.


The Scott London case reinforces the reality that our firm continually faces a significant risk that our employees, who are often privy to highly valuable inside information, will jeopardize the engagements we work on, and will disgrace the reputation of our firm. Although no compliance program can completely eliminate this risk, a robust program can greatly mitigate the danger and more importantly, can reduce the risk that a regulator or law enforcement agent will turn its investigative focus on the accounting firm
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