* Says accounting firm Deloitte Touche Tohmatsu quits
* CFO Jacky Lam resigns
* Says to delay filing annual report
(Adds details about company, background, NEW YORK dateline,
By Himank Sharma and Dena Aubin
NEW YORK, March 14 China MediaExpress Holdings
CCME.O said its auditor severed ties with the company, citing
an inability to rely on management, more than one month after a
short seller accused the advertising company of inflating
China MediaExpress, accused of overstating its revenue by
online research firm and short seller Muddy Waters, also said
Chief Financial Officer Jacky Lam resigned, and the company
will delay filing its annual statements. [ID:nN03116108]
Deloitte Touche Tohmatsu, the auditor, recommended an
independent probe into issues it encountered during its audit,
China MediaExpress said in a statement.
The Hong Kong, China-based company said it authorized an
independent committee to begin such an investigation.
Trading in shares of China MediaExpress had been halted
since Friday morning, when they last traded at $11.88 on
China MediaExpress sells airtime on company-operated TV
screens on public transport buses in China. The shares had
fallen 33 percent when Muddy Waters said on February 3 the
company had far fewer buses than it claimed.
It is one of several Chinese companies whose U.S. shares
have been battered by accusations of misleading accounting.
"Any time an auditor resigns, it's serious," said Drew
Bernstein, co-managing partner at Marcum Bernstein and Pinchuk
LLP, an auditing firm based in China.
"They're basically telling you they have a lack of
confidence in the financials and the information that was
furnished to them," he added.
Also on Monday, China Agritech Inc CAGC.O said it
dismissed Ernst & Young Hua Ming as auditor, saying a service
agreement it had with another Ernst & Young branch office
raised doubts about the auditor's independence. For details
click on [ID:nASA01R3V].
Shares of China MediaExpress, which have been halted on
Nasdaq since Friday, have lost almost half of their value since
the Muddy Waters research report was published.
(Reporting by Himank Sharma; Editing by Richard Chang)