KPMG resigns as auditor for Herbalife, Skechers

Published on NewsOK Modified: April 9, 2013 at 8:26 pm •  Published: April 9, 2013
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NEW YORK (AP) — Accounting firm KPMG has resigned as the auditor for nutrition company Herbalife and shoe retailer Skechers after a rogue partner allegedly leaked information about the companies to someone who used it to trade stocks.

KPMG said it has fired the partner and has no reason to believe there were any problems with the financial reports of Herbalife or Skechers.

Skechers said KPMG told it that the ex-partner provided the inside information in exchange for money and is under federal investigation. An SEC spokesman declined to comment. A message left for the U.S. attorney's office in Los Angeles was not immediately returned.

KPMG confirmed media reports that the fired partner was Scott London, the executive in charge of the firm's audit practice in Southern California. It wasn't clear who he allegedly leaked information to. There was no answer at a home phone number listed for London.

The development is a headache for both Herbalife and Skechers. KPMG withdrew its recent audit reports of both companies, because it felt its own independence had been compromised.

David Weinberg, chief operating officer and chief financial officer of Skechers, was spending Tuesday looking for a new auditor. He learned the news Monday afternoon, when two KPMG employees came to tell him in person.

"I don't think it's catastrophic because we have the greatest confidence in the financial statements that were released and that he (the KPMG partner) acted alone," Weinberg said.

Still, he called the news "an unfortunate development" as the company prepares to report first-quarter earnings, and said he was shocked when he learned it. He didn't think there was anything he could do differently as he looks for a new auditor: "I don't know that it's up to me to give them a polygraph test," he said.

KPMG initially announced late Monday that it had fired a partner who had leaked private information about clients. It said then that it was resigning as auditor for two of its clients, but didn't identify them.

Herbalife and Skechers made their own announcements on Tuesday confirming that they were they companies involved.

KPMG sought to distance itself from the partner. In its statement, the firm said: "This individual violated the firm's rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG's longstanding culture of professionalism and integrity."

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