Why Herbalife Should Sue KPMG

Herbalife (NYSE: HLF  ) has had a rough time of things so far this year, and things got even rougher when the multilevel marketer got sucked into an insider trading scandal at KPMG last week. When a KPMG partner was caught selling inside information on two clients he was auditing, Skechers (NYSE: SKX  ) and Herbalife, and subsequently "fired" both clients, Skechers shares skated away unscathed -- but Herbalife lost more than $100 million in market cap.

How should Herbalife respond to the situation KPMG has put it in? Click through to the following video, and Fool contributor Rich Smith will lay it out for you.

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  • Report this Comment On April 15, 2013, at 2:13 PM, justpassingbye wrote:

    Pretty sure it states somewhere in the AICPA Code of Professional Conduct that KPMG has an ethical responsibility to withdraw from the engagement.

  • Report this Comment On April 16, 2013, at 8:56 AM, mapres wrote:

    Would be interesting to see the relevant portions of the contract. If an auditor disavows past results due to the fault of the auditor, they're likely responsible for returning any fees collected. And maybe KPMG was smart enough to write a contract saying they won't be responsible for any collateral damage.

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