KPMG, one of the country's biggest auditing firms, has fired a senior partner in its Los Angeles office for allegedly engaging in an insider-trading scheme.
The partner passed confidential client information to someone who then traded stocks in several West Coast companies, KPMG said in a statement posted on its website. The partner, whom the firm did not identify, was in charge of KPMG's audit practice in the L.A. office.KPMG said it notified two of its clients it would have to withdraw audits performed for the companies, though it had no reason to believe the reports contained any financial misstatements.
The firm described the partner's conduct as "rogue actions."
"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," the firm said.
KPMG said it learned of the partner's alleged misconduct last week, though it did not say how. The firm said the partner was "immediately separated" from KPMG.
Federal authorities are investigating the individual's actions and the firm is cooperating, according to a person familiar with the matter. The partner was in charge of auditing for the Pacific Northwest region and was not head of the L.A. office, according to this source.
The federal government is more than five years into a sprawling crackdown on insider trading on Wall Street and corporate America.
The FBI has employed wiretaps to catch those illegally providing and profiting from material, nonpublic information unavailable to the investing public. Federal prosecutors in New York have won more than 70 insider-trading convictions since August 2009, with no acquittals.