L.A.-based accountant fired for leaking inside information*

Pretty hot news - KPMG says one of its senior partners passed on the information to a third party who traded in several West Coast companies, including L.A.-based Herbalife. The accounting giant has resigned from the Herbalife account, though the company says that KPMG's actions are not related to financial reporting. (Given the ongoing questions about the way Herbalife operates its business, the question was sure to come up.) KPMG is also the auditor for Skechers, which halted trading of its stock. The firm came under fire some years back when two former partners were convicted of selling fraudulent tax shelter schemes to clients. Still lots to sort out in this one, including whether the feds have or will get involved in the case. From the WSJ:

KPMG said the partner "was involved in providing nonpublic client information to a third party, who then used that information in stock trades involving several West Coast companies." The firm didn't identify the third party or any of the companies involved. KPMG said it was informed of the partner's actions late last week. The firm described the partner's actions as "rogue" and said the partner "violated the firm's rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG's long-standing culture of professionalism and integrity."

From the Herbalife statement:

KPMG stated it had concluded it was not independent because of alleged insider trading in Herbalife's securities by one of KPMG's former partners who, until April 5, 2013, was the KPMG engagement partner on Herbalife's audit. 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.

*From DealBook:

Federal prosecutors and securities regulators in Los Angeles are investigating a former senior partner at KPMG for leaking secret information to a stock trader, according to people with direct knowledge of the inquiry. The case involves alleged tips about confidential data related to Herbalife, the nutritional-supplement seller, and Skechers USA, the footwear maker, according to these people. On Tuesday morning, Herbalife announced that KPMG had resigned as their auditor, and Skechers shares were halted pending a news release.

*Update: The WSJ has identified the KPMG partner as Scott London, who was in charge of audit practice for the firm in Southern California.

*Edited post