Fired KPMG Auditor Is Prominent L.A. Businessman

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The fired auditor at the center of a Los Angeles insider trading case has been identified as Scott London, a longtime partner in the downtown L.A. office of accounting firm KPMG and a board member of the Los Angeles Area Chamber of Commerce.

KPMG announced late Monday it had fired a partner for allegedly giving stock traders inside information about Manhattan Beach’s Skechers USA Inc. and downtown L.A.’s Herbalife Ltd. The global firm also said that London is the subject of a federal insider-trading probe.

The Wall Street Journal on Tuesday identified the partner as London, a Cal State Northridge graduate who sits on the advisory board of the university’s business school. Accountants at other firms said London is well-known locally.

“I was flabbergasted,” said Sam Wild, a partner in the Century City office of accounting firm Marcum LLP. “He’d been there a lot of years.”

KPMG on Tuesday resigned as auditor for Skechers and Herbalife, meaning the companies will have to find new auditing firms and re-audit their books from the past two years, as well as possibly delay upcoming earnings announcements. Trading of Herbalife and Skechers shares was suspended for several hours Tuesday.

Wild said it can take as little as a week for a public company to hire a new auditing firm, though Ron Friedman, partner in charge of Marcum’s local office, said Skechers and Herbalife might take longer this time.

“I’m sure they were taken aback by this,” Friedman said. “I think they’re going to have to do their own in-house background checks” before hiring a new auditor.

Skechers is scheduled to report first-quarter earnings on April 24 and Herbalife on April 29. It’s not clear if those dates will be pushed back.

In Tuesday trading on the New York Stock Exchange, Herbalife shares closed down $1.44, or less than 4 percent, to $36.95, and Skechers closed up 40 cents, or less than 2 percent, to $21.91.

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