NOTE: We wrote earlier per a CNBC report that former KPMG partner Scott London, who faces a civil complaint from the SEC over his role in an insider trading scheme involving Herbalife, passed along rumors to the effect that Herbalife could go private.
We have since been notified that this was taken out of context. The allegations regarding the "going private" rumors are found in a criminal complaint filed by the FBI today.
This is how that section of the criminal complaint reads:
London then referenced rumors that had been spread recently about HLF going private, which had been discussed in various news reports. London stated, "That is going to be where you make a ton of money...because, you know, we'll know that." London then advised that if that were to take place, "what we oughta do is, when I know that it's gonna start happening, what you do is you start just buying in small blocks, right so it doesn't draw attention and then, you know, then it doesn't look unusual at all.
EARLIER: Herbalife shares are surging on the announcement that the SEC has charged former KPMG partner Scott London, who oversaw Herbalife audits, with insider trading.
According to CNBC's Josh Lipton, London passed along tips about rumors that Herbalife could go private to investors, saying that was where they would really make money on the stock.
The stock initially jumped to an intraday high of $39.80 from levels around $37.50 prior to the announcement, but has since backed off a bit. Now, it's up around 5 percent on the day.
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