Herbalife KPMG quits amid allegations

Herbalife, the weight-management company at the center of a battle between hedge funds, said Tuesday that accountant KPMG had resigned as its auditor due to alleged insider trading by a KPMG senior partner. KPMG resigned "solely due to the impairment of KPMG's independence resulting from its now former partner's alleged unlawful activities" and not for any reason relating to the company's management or financial statements, Herbalife said in a statement. KPMG announced Monday that it had fired an unidentified senior partner working in its Los Angeles office. The partner "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 did not identify the companies whose shares were traded. Herbalife shares were suspended for more than two hours early Tuesday ahead of the company's statement. After trade resumed, the stock was down 1.3 percent around midday. Herbalife has seen volatile trading in its shares in recent months amid a public spat between large hedge fund investors over the nutritional supplements company's structure. Bill Ackman's firm Pershing Square Capital has charged that Herbalife is a "pyramid scheme," a charge vociferously fought by the company and other leading shareholders.