The trading for Skechers USA Inc (NYSE:SKX)’s stock resumed after being halted for two hours Tuesday morning due to the resignation of KPMG as independent auditor of the footwear company.
According to the footwear company, KPMG resigned due to the misconduct of its lead Audit Engagement Partner on the Skecher’s account. In its public statement, KPMG emphasized that it has “no reason to believe that the financial statements of Skechers have been materially misstated.”
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
Skechers USA Inc (NYSE:SKX) said that KPMG admitted that its Lead Audit Engagement Partner for Skechers account is under federal investigation for providing insider information to a third party in exchange of money. According to the company, the third party used the information to trade stocks on several companies in the West Coast.
KPMG also informed Skechers that its audit partner is cooperating with the investigators. KPMG’s audit partner admitted that Skechers’ non-public information was also provider to a third party. Because of the situation, KPMG believed that its independence was impaired and its immediate resignation as independent auditor is necessary.
In a statement, David Weinberg, chief operating officer and chief financial officer of Skechers USA Inc (NYSE:SKX) said, “KPMG has advised us that that they have no reason to believe that there were any misstatements in our financial statements, and we firmly believe that there has been no misstatements of our results or financial condition.”
Weinberg added that the situation was unfortunate because Skechers USA Inc (NYSE:SKX) is preparing to release its earnings report for the first quarter of 2013. According to him, the footwear company is working diligently to replace KPMG quickly and efficiently.
Meanwhile, Herbalife Ltd. (NYSE:HLF) also issued a similar statement that KPMG resigned as independent accountant because of the alleged insider trading of the shares of the company by its audit partner.
KPMG told the same reasons to Herbalife Inc (NYSE:HLF) that its independence had been reduced due to the unlawful activities of its audit partner. KPMG’s auditing partner in Herbalife is headed by Scott London. The auditing firm emphasized that its resignation was not related to the company’s financial statements, accounting practices or the integrity of the management of Herbalife.
The auditing firm withdraw its audit reports on the financial statements if Herbalife Ltd. (NYSE:HLF) for the fiscal years the ended December 31, 2010, 2011, and 2012. Herbalife’s Audit Committee and management continue to believe that the financial condition and results of its operations reported in the financial statements in the referenced periods were effective.