On $11$ 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 $2013$a$).$ The director of the SEC$$s office in Los Angeles stated: $$As a leader at a major accounting firm, London$$s conduct was an egregious violation of his ethical and professional duties$($SEC $2013$a$).$

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 $2013$b$,$ 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 doesn$$t take long for bad public perception about accounting firms, like what happened to Arthur Andersen in $2002.$ So I want to do as much as I can to set things right. What I did was wrong, and I take full responsibility. However, this is a subject matter that unfortunately may be very prevalent among people who have access to confidential information, but it$$s difficult to catch people doing it$.$ Even seemingly innocuous conversations with a good friend can lead a person to be tempted and think they won$$t get caught. I hope that my story can help prevent others from crossing the line$$

$($O$$Bannon $2014).$

Required:

a$)$ Identify at least five potential stakeholders from the case above and discuss how were they affected by the actions of Scott London? $(5$ marks$)$

b$)$ Discuss how the fundamental principles of the code of ethics were breached by London. Provide justifications to support your answer. $(5$ marks$)$