Herbalife Ltd. is making progress in its search for a new accounting firm, executives said during a conference call with analysts Tuesday. The Los Angeles nutritional products company was forced to hire a new accounting firm after KPMG resigned earlier this month because one of its senior partners was accused of insider trading in Herbalife stock. The search for a new firm began the day after KPMG's resignation and "has been moving quickly and is nearing completion," Herbalife Chief Financial Officer John DeSimone said. [LAT]
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(UPDATE) Madoff Investors Sue KPMG, JP Morgan, Bank of New York Mellon
By our last count KPMG had been named in ten lawsuits related to Madoff feeder funds. What’s one more?
KPMG, JP Morgan, Bank of New York Mellon, Oppenheimer Acquisition Corp. and Mass Mutual Life Insurance, along with the Tremont founders were all named in an amended lawsuit that was filed yesterday.
Cotchettt, Pitre, & McCarthy, the attorneys for the Plaintiffs, are not mincing words on KPMG’s part in the whole mess. From the firm’s website:
The sheer size and scope of the fraud make it impossible for Madoff to have acted alone. The complaint alleges JP Morgan and the Bank of New York as well as powerhouse accounting firm KPMG LLP and their international counterparts, KPMG UK and KPMG International were primary players responsible for the fraud.
The amended complaint further alleges that the phantom trades “should have been discovered by KPMG UK, the auditor for Madoff’s London based operation, Madoff Securities International Ltd. Instead, KMPG UK never raised any red flags that investors’ money was used by Madoff as his personal piggy bank.”
KPMG declined to comment for the Reuters article but we’ll assume that they don’t take kindly to the complaint.
Madoff investors sue KPMG and major banks [Reuters]
MADOFF_WEXLER_FIRST_AMENDED_COMPLAINT.pdf
UPDATE: The UK Firm issued the following, per Accountancy Age:
KPMG considers the allegations in the complaint to be wholly without merit and will defend them vigorously. The complaint cites KPMG in its capacity as statutory auditor of Madoff Securities International Limited (MSIL), a London based company directly owned by the Madoff family. KPMG acted in this capacity for several years and issued unqualified audit opinions on MSIL’s financial statements. We are not aware of any suggestion that the financial statements of MSIL contain errors.