n 11 April 2013, Scott London (London), a former senior audit partner at KPMG Los Angeles who had worked at KPMG for nearly 30 years, was charged by the FBI with insider trading. On the same day, the US Securities and Exchange Commission (SEC) filed civil charges against London (SEC 2013a). The director of the SECs office in Los Angeles stated: As a leader at a major accounting firm, Londons conduct was an egregious violation of his ethical and professional duties (SEC 2013a). As a result of his position, London had access to highly sensitive and confidential information regarding upcoming earnings announcements about KPMG clients before that information was disclosed to the public. For over two years, London illegally provided this confidential information to his close friend Bryan Shaw, who made over USD$1 million in profit by using the information to trade securities. In exchange, Shaw gave London thousands of dollars in cash, a Rolex watch, and concert tickets (FBI 2013). On 1 July 2013, London pleaded guilty to insider trading and admitted to disclosing confidential information to Shaw. On 27 September 2013, London was banned by the SEC from auditing public companies and denied the privilege of appearing or practicing before the Commission as an accountant (SEC 2013b, p. 9). On 24 April 2014, London was sentenced to 14 months in jail, commencing in July 2014, and ordered to pay a $100,000 fine. After being sentenced, London said I had to plead guilty. The impacts on the profession and KPMG could have led to even further damage if there had been a long investigation and court case. It doesnt take long for bad public perception about accounting firms, like what happened to Arthur Andersen in 2002. So I want to do as much as I can to set things right. What I did was wrong, and I take full responsibility. However, this is a subject matter that unfortunately may be very prevalent among people who have access to confidential information, but its difficult to catch people doing it. Even seemingly innocuous conversations with a good friend can lead a person to be tempted and think they wont get caught. I hope that my story can help prevent others from crossing the line (OBannon 2014). Discuss how the fundamental principles of the code of ethics were breached by London. Provide justifications to support your answer.