Herbalife Slumps After KPMG Exits Citing Fired Partner (Update 2)

Updated from 1:19 p.m. ET with latest price action

NEW YORK ( TheStreet) -- Shares of Herbalife ( HLF) slumped Tuesday afternoon after the nutritional-supplement maker said its accountant KPMG had resigned. Shares were falling 3.1% to $37.21 after dropping as much as 5.7%.

Herbalife opened two hours late on the New York Stock Exchange. The company in a statement said KPMG would immediately resign as its accounting firm because of alleged insider trading of Herbalife securities by a former partner. The former employee was the KPMG "engagement partner" on Herbalife's audit, the company said.

"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," the Cayman Islands-based company said.

Herbalife shares have lost 45.7% over the past 12 months.

The statement, which followed a New York Times report on the matter, did not name the fired KPMG partner.

-- Written by Joe Deaux in New York.

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