Skechers USA Inc. has confirmed the resignation of its independent auditor, KPMG, after news broke about an alleged insider trading offense committed by a senior partner in KPMG’s West Coast practice.
Skechers’ stock had been halted for a little over an hour on the New York Stock Exchange Tuesday morning, as news emerged that its shares, along with those of nutritional-supplement maker Herbalife Ltd., had been traded illegally due to the leakage of non-public information from the KPMG partner to a third party in exchange for money.
KPMG said the senior partner, who was based in Los Angeles, has been fired.
Skechers added that, according to the auditing firm, the partner in question is understood to be under federal investigation for providing the privileged information; has admitted Skechers was one of the clients involved; and is cooperating with the authorities.
KPMG also has advised Skechers that, as a result of these developments, its independence has been impaired and it must withdraw its auditors’ reports for the fiscal years 2011 and 2012.
In a statement released Tuesday, Skechers COO and CFO David Weinberg called the development “unfortunate” in light of the firm’s preparation to release positive results for its first quarter of 2013.
“KPMG has advised us that they have no reason to believe that there were any misstatements in our financial statements, and we firmly believe that there has been no misstatements of our results or financial condition,” Weinberg said in a statement. “Nonetheless, it is an unfortunate development at a time when we are preparing to release earnings for the first quarter of 2013, a quarter which, like the fourth quarter of 2012, we believe will show significant growth and the continuing strength and viability of our business. We are working diligently to replace KPMG as quickly and efficiently as possible as we look forward to releasing positive results for the first quarter of 2013 later this month.”
Skechers’ stock is now trading about 2 percent higher, around $21.95 a share, buoyed by a bullish forecast from both the company and analysts. Skechers had opened 1.7 percent higher before trading was halted, boosted by a research report Monday by Susquehanna Financial analyst Christopher Svezia.
According to Yahoo Finance, the Street expects Manhattan Beach, Calif.-based Skechers to report first-quarter earnings of 19 cents a share, on revenue of $435.1 million, later this month.