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Herbalife Auditor Resigns Amid Insider Trading Rumors

12:59 PM, Apr 9, 2013   |    comments
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Trading in shares of vitamin seller Herbalife (HLF) resumed before Noon after a halt early Tuesday. The company subsequently disclosed that KPMG had resigned as its auditor.

After the halt ended, Herbalife shares were off 35 cents or 0.91% to $38.04 a share.

Herbalife says the resignation had nothing to do with problems at the company, but rather was the result of alleged insider trading in Herbalife securities by one of KPMG's former partners.

In a statement released Tuesday morning, KPMG said "Late last week, we were informed that the partner in charge of KPMG's audit practice in our Los Angeles business unit was involved in providing non-public client information to a third party, who then used that information in stock trades involving several West Coast companies."

KPMG said the "partner was immediately separated from the firm."

Herbalife's statement said, "KPMG advised the Company it resigned as Herbalife's independent accountant solely due to the impairment of KPMG's independence resulting from its now former partner's alleged unlawful activities and not for any reason related to Herbalife's financial statements, its accounting practices, the integrity of Herbalife's management or for any other reason."

Footwear maker Skechers was reported to be in the same boat with KPMG and trading was halted in that stock (SKX) also.

Speculation about reasons for the Herbalife trading halt ran high, as the stock has been a battleground between big and well-known investors.

Hedge fund manager Bill Ackman is betting against the stock, calling the company a pyramid scheme. On the other side, investors Daniel Loeb and Carl Icahn have become big investors in Herbalife, saying the shares are being unfairly punished.

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