NQ Mobile Tumbles Most in Six Weeks in New York as CFO Resigns

Aug 15, 2014 10:35 am ET

Aug. 15 (Bloomberg) -- NQ Mobile Inc., the mobile-security service provider that short-seller Carson Block has accused of overstating revenue, fell the most in six weeks after saying Chief Financial Officer KB Teo is resigning.

The Beijing-based company’s American depositary receipts sank 12 percent to $5.64 as of 9:38 a.m. in New York, for the biggest decline since July 3. The ADRs tumbled 72 percent through yesterday since Muddy Waters LLC, the research firm founded by Block, said Oct. 24 that the company misrepresented cash balances.

NQ Mobile said Chief Operating Officer Vincent Wenyong Shi will take over as acting CFO until a replacement is found. While the company in early June said an internal investigation didn’t find evidence of fraud in its efforts to refute Block’s allegations, investors are still waiting to see its audited 2013 annual report. NQ Mobile replaced PricewaterhouseCoopers Zhong Tian LLP with a new auditor last month after twice delaying the filing the document report since end of April.

NQ Mobile said in a statement that Teo’s departure, which comes after the company’s audit committee chair stepped down last month, is for “family reasons” and is not related to operations, policies, or accounting practices and it remains fully confident in all of its previously reported financial reports and filings as to their accuracy and does not expect any material changes.

“Within mere weeks, NQ has lost its CFO, audit committee chair, and Big 4 auditor,” Block said by e-mail. “It’s just sad comedy to watch this company continue to deny that it’s a fraud.”

Bison Capital Holding Co., a China-based investment firm, proposed to buy NQ Mobile for $9.80 per ADR in a non-binding offer on July 30.