Trading on Herbalife Ltd. (NYSE:HLF) shares was halted briefly before a major news announcement. The company has reported the name of its new auditor to the Securities and Exchange Commission in its most recently filed 8K. After trading on the stock resumed today, shares rose as much as 4 percent on the news of which firm will be auditing Herbalife Ltd. (NYSE:HLF)’s financial statements.
The company’s former auditor, KPMG, resigned in April amidst allegations of insider trading. KPMG also withdrew its audit reports on Herbalife Ltd. (NYSE:HLF)’s financial statements for the last three completed years. The firm said the reports should no longer be relied upon because of its lack of independence, which was caused by the insider trading allegations involving one of its former partners.
PricewaterhouseCoopers Selected As Herbalife’s New Auditor
Since then, the embattled company has struggled to find a new auditor. As of today, we now know the name of Herbalife’s new auditor. It’s none other than PricewaterhouseCoopers LLP, one of the most respectable firms in the business.
Herbalife Ltd. (NYSE:HLF) reported that it has hired PricewaterhouseCoopers to audit its financial statements for the current fiscal year and to re-audit its financial statements for the three years which were withdrawn by KPMG.
Herbalife’s Selection Process
The nutritional supplement company said it worked with PricewaterhouseCoopers and identified some non-audit services that had been provided to it from firms connected with PwC. The services are not allowed under the auditor independence rules set forth by the SEC.
After discussing the services and deciding that they will not affect PwC’s objectivity or impartiality, Herbalife officially hired PwC. The 8K filing also identifies those services.
Herbalife History Lesson
Herbalife Ltd. (NYSE:HLF) has been in the spotlight since December when well-known activist investor Bill Ackman announced that he held a very large short position in the company’s stock and referred to it as a pyramid scheme.
The heat was turned up on the company this year, first when other hedge fund titans stepped into the fray over its practices and then with this scandal involving its now-former auditor and insider trading allegations.