Herbalife maintained that its financial statements are sound and reliable amid news that its auditor is in the middle of an insider-trading investigation.
Scott London, 50, a senior partner with KPMG, was ousted by his company after it learned the Department of Justice was investigating him for providing privileged non-public information to a third party who used it to make stock trades.
“Herbalife’s Audit Committee and management continue to believe that the company's financial statements covering the referenced periods fairly present, in all material respects, the financial condition and results of operations of the company,” the weight loss and nutrition company said.
Herbalife contacted securities regulators immediately after KPMG disclosed the insider trading, said Barbara Henderson, an Herbalife spokeswoman.
“We proactively reached out to regulators on this issue,” she said, but declined to say which agency the monitors were with.
Henderson declined to say which agency.
KPMG’s embarrassment will turn out to be good news for at least one of its competitors. KPMG is one of the four largest accounting firms in the country. The others are Deloitte, Price Waterhouse Cooper and Ernst & Young.
“We’ve already begun a search to identify a new independent accounting firm,” Henderson said. “The company will disclose its engagement of a new independent accounting firm once the process is completed.”
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