KPMG has resigned from its audits of the nutrition company Herbalife and footwear retailer Skechers after one of its senior auditors was discovered to be involved in insider trading.

“Late last week, we were informed that the partner in charge of KPMG’s audit practice in our Los Angeles business unit was involved in providing non-public client information to a third party, who then used that information in stock trades involving several West Coast companies,” the company said in a statement forwarded by spokesman Timothy Connolly. “The partner was immediately separated from the firm.

“KPMG’s 22,000 partners and employees unequivocally condemn this individual’s rogue actions,” the firm added. “This individual violated the firm’s rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG’s long-standing culture of professionalism and integrity.

“KPMG is resigning two clients after concluding today that the firm’s independence has been impacted as a result of this individual’s behavior, and we have informed those companies it is necessary to withdraw our auditor reports,” the statement continued. “We have no reason to believe that the financial statements of these companies have been materially misstated. We regret the impact this individual’s actions have had on any of our clients. KPMG remains committed to the highest standards of professionalism, integrity and quality, and we are dedicated to the capital markets we serve.”

Trading in Herbalife was temporarily suspended Tuesday. The Los Angeles-based company announced that KPMG had notified it on Monday that KPMG was resigning, effective immediately, as Herbalife’s independent accountant.

“KPMG stated it had concluded it was not independent because of alleged insider trading in Herbalife’s securities by one of KPMG's former partners who, until April 5, 2013, was the KPMG engagement partner on Herbalife's audit. KPMG advised the company it resigned as Herbalife’s independent accountant solely due to the impairment of KPMG’s independence resulting from its now former partner's alleged unlawful activities and not for any reason related to Herbalife’s financial statements, its accounting practices, the integrity of Herbalife's management or for any other reason.”

None of KPMG's audit reports on Herbalife's financial statements for the fiscal years ended Dec. 31, 2010, 2011 and 2012 or KPMG's audit reports on the effectiveness of internal control over financial reporting as of Dec. 31, 2010, 2011 and 2012 contained an adverse opinion or a disclaimer of opinion, nor was any such report qualified or modified as to uncertainty, audit scope or accounting principles, Herbalife noted. But as a result of the alleged insider trading activity by its now former partner and KPMG's resulting resignation on April 8, 2013, KPMG notified Herbalife that KPMG’s independence had been impaired and it had no option but to withdraw its audit reports on Herbalife’s financial statements for the fiscal years ended Dec. 31, 2010, 2011 and 2012 and the effectiveness of internal control over financial reporting as of Dec. 31, 2010, 2011 and 2012 and that such reports should no longer be relied upon as a result of KPMG’s lack of independence created by the circumstances described above.

As a result, Herbalife said it would be withdrawing the proposal to ratify the appointment of KPMG as Herbalife’s independent registered public accountants for fiscal 2013, which was originally planned to be submitted to Herbalife’s shareholders at Herbalife's annual general meeting to be held on April 25.

Skechers also announced KPMG’s resignation as auditor on Tuesday. The Manhattan Beach, Calif.-based company said KPMG LLP had resigned April 8 as independent auditor of Skechers due to misconduct by KPMG’s lead audit engagement partner on the Skechers account. In connection with its resignation, KPMG has publicly stated that it has “no reason to believe that the financial statements of Skechers have been materially misstated.”

“KPMG has advised us that 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,” Skechers COO and CFO David 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.”

Upon the firm's resignation, Skechers was informed by KPMG that KPMG’s lead audit engagement partner on the Skechers account is under federal investigation for providing non-public information of his clients to a third party in exchange for money. The third party then used that information to trade stocks of several West Coast companies. KPMG told Skechers that the KPMG audit partner under investigation is cooperating with the authorities and admitted that Skechers was one of its clients whose non-public information was provided to a third party in exchange for money.

KPMG further advised Skechers that, as a result of these developments, KPMG has determined that its independence has been impaired and it must resign as Skechers auditors immediately and withdraw its auditors’ reports for the fiscal years 2011 and 2012.

KPMG advised the company it resigned as Skechers’ independent accountant solely due to the impairment of KPMG's independence resulting from its now former partner's alleged unlawful activities and not for any reason related to Skechers’ financial statements, its accounting practices, the integrity of Skechers' management or for any other reason.

None of KPMG's audit reports on Skechers’ financial statements for the fiscal years ended Dec. 31, 2011 and 2012 or KPMG's audit reports on the effectiveness of internal control over financial reporting as of Dec. 31, 2011 and 2012 contained an adverse opinion or a disclaimer of opinion, nor was any such report qualified or modified as to uncertainty, audit scope or accounting principles, the footwear maker noted. In addition, at no point during the two fiscal years ended Dec. 31, 2012 and the subsequent interim period through April 8, 2013 were there any disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

Skechers noted that it has immediately started to search for replacement auditors in an effort to have them in place as soon as possible, but the company is unable to provide an estimate of when the re-audit of fiscal years 2011 and 2012 will be completed.