KPMG Fires Partner in Insider Trading Scandal

In April, federal prosecutors charged Charles London, an audit partner at the prominent accounting firm KPMG, with criminal insider trading.  London is accused of leaking information about Skechers USA, a shoe company, and the supplement company Herbalife.  He claims that he provided information about the companies to a friend whose business was struggling.  The friend made approximately $1 million by trading stock in two companies.  Although London has indicated that he helped the friend for reasons other than monetary gain, he admitted that the friend provided him cash and gifts.  A source close to the federal investigation has said that London’s friend was not a professional investor.

Upon learning of London’s actions, KPMG fired him and resigned as auditor for the two companies.  It also withdrew its audits of the two companies for the preceding few years.  The latest news is a blow to the image of the accounting giant, which had paid several fines of more than $10 million to regulatory authorities over the last decade, including a $456 million fine in 2005 for its role in a tax evasion scheme involving its clients.

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