(Adds details, background, share move)
July 3 NQ Mobile Inc's independent
auditor has informed the company that it will need to expand the
scope of its 2013 audit, the Chinese mobile security software
The company's shares were down 21 percent in premarket
trading on Thursday.
The stock has been volatile after short-seller Muddy Waters
Research Group called NQ Mobile a "massive fraud" in October, a
charge the Chinese company rejected.
NQ responded to the short-seller's allegations by forming a
special committee, which said in June that it had found no
evidence of fraud.
The request from auditor PricewaterhouseCoopers Zhong Tian
LLP to perform additional procedures related to their 2013 audit
follows the release of the findings by the investigation
NQ said on Thursday its board and audit committee were
considering the auditor's request.
The company also said that the chair of its audit committee
would step down due to personal reasons, effective July 6.
Short-sellers make money when the stock price of a company
drops. They sell borrowed shares in the hope of buying them back
at a lower price, returning them to the lender and pocketing the
NQ's shares closed at $6.76 on Wednesday on the New York
Stock Exchange. Up to Wednesday's close, the stock had lost more
than two-thirds of its value since Muddy Waters' allegations.
(Reporting by Supantha Mukherjee in Bangalore; Editing by