* Peter Mak resigned from audit committee
* Mak is also CFO of troubled A-Power Energy
* Trina shares down 11.4 percent
* Option volume 7.8 times greater than average
(Adds details on Mak, analyst quote)
By Nichola Groom
LOS ANGELES, July 12 Trina Solar Ltd TSL.N
said the chairman of its audit committee had resigned from its
board, sending the Chinese solar company's shares down more
than 11 percent.
Peter Mak resigned effective July 10 "to focus on other
personal and professional pursuits," Trina said in a statement
Mak is also chief financial officer of A-Power Energy
Generation Systems Ltd APWR.O, although his contract with the
Chinese power plant developer is due to expire this week.
A-Power's independent auditor, MSCM LLP, resigned late last
month because the company did not hire an independent forensic
accounting firm to evaluate transactions, as required. Three of
A-Power's directors have resigned since then, and the company
has warned that it would delay its annual report to securities
"The bottom line is that Trina shareholders should be
pleased that Mak with his checkered past has left the board,"
Raymond James analyst Pavel Molchanov said in a client note.
"It is fundamentally erroneous to infer that Trina's accounting
has been somehow flawed purely because of Mak's prior work at
Jerome Corcoran, another Trina director, is replacing Mak
as chairman of the audit committee, of which he was previously
Trina stock was down 11.4 percent at $17.50, making it the
second-biggest percentage loser on the New York Stock Exchange.
The shares had hit a 13-month low earlier in the session.
"This certainly should raise alarm bells and make people a
little more cautious," Morningstar analyst Stephen Simko said.
"There is going to be a lot of focus on their accounting."
The news came a day after rating agency Moody's Investors
Service raised warnings about accounting and corporate
governance risks at dozens of China-based companies, leading to
a sharp drop in their shares and bonds on Tuesday
[ID:nL3E7IC05G]. Neither Trina nor A-Power was among the
companies Moody's reviewed in the report.
Meanwhile, the implied volatility in Trina options surged
on increased put volume after the news, said WhatsTrading.com
options strategist Frederic Ruffy.
Implied volatility, a barometer of anxiety and a key
component of an options price, measures in percentage terms the
expected magnitude of share price movement.
Trina option volume was 7.8 times greater than average
daily turnover with about 34,000 puts and 17,000 calls traded
by early afternoon on Tuesday, according to options analytics
firm Trade Alert.
Also on Tuesday, Trina said Yeung Kwok On, one of its
directors, would replace Corcoran as chairman of the board's
corporate governance and nominating committee. Board member
Qian Zhao will replace Mak on that committee.
Trina's news came as a revenue and margin warning from
Chinese wafer maker ReneSola Ltd (SOL.N) sparked a sell-off in
most solar stocks. [ID:nL3E7IC1IT]
(Additional reporting by Doris Frankel in Chicago; editing by
John Wallace and Lisa Von Ahn)