KPMG LLP resigned as the auditor for two companies and fired the partner overseeing its Los Angeles audit practice amid allegations the person leaked confidential client information to a third party who used it to make stock trades. (Patrick T. Fallon/BLOOMBERG)

As investors Carl Icahn and William Ackman bickered loudly on TV this year about their opposing bets on Herbalife, two other men were discussing the company in a different context: obtaining non-public information to trade ahead of the stock’s next move.

Referring to Icahn’s announcement that he had purchased a large stake in the nutritional-products company, one of the men said: “I wish you would’ve known that he was going to release that, and we could’ve made some money.”

The other replied: “Yeah, that would’ve been nice.”

According to prosecutors, the conversation was part of a call that California jeweler Bryan Shaw recorded and later shared with the FBI to help in its investigation of his longtime golf partner, Scott London. At the time, London was a senior KPMG auditor who had been leaking information about his clients to Shaw.

U.S. authorities filed criminal and civil charges Thursday against London, who is accused of passing Shaw non-public information about five of KPMG’s clients.

On Thursday afternoon, a federal judge in Los Angeles freed London on a $150,000 bond, ordered him to turn over his passport and directed the former KPMG auditor not to make contact with Shaw unless in the company of attorneys.

London’s attorney, Harland Braun, said his client intended to plead guilty when he is formally arraigned May 17.

“Had my client been asked to give information for cash, he would have said no,” Braun told reporters in the courthouse hallway after the proceeding. “This is that gray area, when you talk at the country club. But once you take money, you’re dead.”

According to prosecutors, Shaw made about $1 million trading on the tips and gave London roughly 10 percent of his profit on each of the trades in the form of cash, jewelry, concert tickets and free meals.

One gift for London was a Rolex Daytona Cosmograph watch valued in 2011 at $12,000. Another one was $10,000 wrapped into a bundle of $100 bills. Shaw told the FBI that he believed he spent $25,000 to $45,000 in concert tickets for the two of them, including a Bruce Springsteen event.

Braun disputed the amounts, saying his client received only about $35,000. London turned over $7,500 in cash and the Rolex at the courthouse.

“I can’t understand why he took the money,” the attorney said. “He didn’t need it.”

Prosecutors charged London, a Los Angeles-based auditor, with one count of conspiracy to commit securities fraud for giving Shaw information about public companies, including Herbalife, Skechers USA and Deckers Outdoor.

Deckers did not respond to multiple calls and e-mails seeking comment. Herbalife and footwear maker Skechers disclosed this week that KPMG had quit as their auditors in response to the matter. A spokesman for KPMG did not respond to a request for comment.

According to the complaint filed in federal court in Los Angeles, London also advised Shaw on the best ways to trade on the information.

For instance, he told Shaw about a merger between KPMG client RSC Holdings and United Rentals and reassured his friend about trading on the takeover because “regulators were not looking for ‘small fish,’ ” according to the complaint.

United Rentals spokesman Fred Bratman told Reuters by phone: “We are not a party to this case, but we will obviously cooperate and provide any assistance that we can to the appropriate authorities.”

He did not confirm or deny that KPMG was the auditor of RSC Holdings.

London also told Shaw about a takeover of Pacific Capital Bancorp by Union Bank, according to the charges. Tom Taggart, the spokesman for Pacific Capital’s current parent, Union Bank, declined to comment.

The case has already cost London his job. It has also prompted some public confessions rarely seen in insider-trading cases. Soon after news of the case broke this week, London admitted to the Wall Street Journal that he passed on information to his friend but did not know he would trade on it.

Legal experts said that it was rare for insider-trading suspects such as London to make public statements and that they could cause more problems for him.

Braun told reporters on Thursday that his client came forward to talk with the Wall Street Journal about his involvement in the scheme because he was trying to protect KPMG and its employees.

— Reuters