KPMG resigns as auditor for Herbalife, Skechers

Accounting firm KPMG has resigned as the auditor for Herbalife (NYSE_HLF), a dietary supplements maker, and the shoe retailer Skechers (NYSE_SKX) after a rogue partner allegedly leaked information about the companies to someone who used it for insider trading.

KPMG said it has fired the partner and had no reason to believe there were any problems with the financial reports of the two companies. KPMG did withdraw its recent audit reports on both companies because it felt its independence had been compromised.

KPMG didn't reveal the partner's identity. It announced the dismissal in a statement late Monday in which it also said it was resigning as auditor for two companies that it didn't identify.

Herbalife and Skechers made their own announcements on Tuesday confirming that they were they companies involved. 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 in Washington declined to comment.

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."

Investors knew something was wrong when Herbalife shares failed to open along with the rest of the stock market Tuesday morning. Skechers did open for trading, but it was halted later in the morning.

Both stocks resumed trading later Tuesday. Herbalife fell $1.03, or 2.7 percent, to $37.36 in early afternoon trading. Skechers rose 53 cents, or 2.5 percent, to $22.04.

The development comes at an awkward time for Herbalife. Activist investor Bill Ackman has publicly attacked Herbalife, saying it is distorting the financial information it gives to investors. His rival Carl Icahn has vehemently disagreed and has increased his stake in the company. In February, the wrangling boiled over in public as Ackman and Icahn got in a shouting match on live television.

Herbalife has gone on the defensive against Ackman, disputing his characterization of the company and saying that Ackman wants to push the stock down for his own benefit.

Los Angeles-based Herbalife sells energy drinks and stress management pills and recruits people to work as independent sales staffers. On its website, it promises to "change people's lives" either by the chance to sell Herbalife products, or the chance to take them.

Skechers, which is based outside of Los Angeles, is a well-known shoe seller.(AP:NEW YORK)

AP Business Writer

2 thoughts on “KPMG resigns as auditor for Herbalife, Skechers

  1. If you get a signal from trade triangles say the monthly and all the other signals are already green. How do you determine what your target is and your stop loss is after entry? Thank you.

    1. Stops are definitely important given the volatile conditions of today's domestic and international economy. We do not suggest specific loss placements, nor do we place stop loss placement values onto the charts. Given that traders have many different objectives for their individual trading plans, we leave stop loss placements up to the discretion of the trader.

      However, since our “Trade Triangles” are used to enter and exit the markets, you can anticipate when the “exiting” triangle will be issued and therefore place your stop loss values accordingly. Our algorithm is based upon various weighted factors; however one of the most heavily weighted factors is the previous three period high or low. With this said, traders can identify the highest high, or lowest low of the previous three periods (daily, weekly or monthly) as a point where the odds are high that an opposing triangle will be issued which would suggest to exit the position.
      We suggest that you always use stops, but that you use a method that will best fit your objective and your trading personality. There are many methods for setting stops. We have a few posts on our Trader’s Blog that discuss these various techniques <>. Also on our blog we’ve shared an audio and PDF workbook from one of our INO TV authors, Joe Ross on a seminar called, “Where Do I Place My Stops?” Feel free to access the PDF workbook and audio here: and .


Comments are closed.