China MediaExpress Holdings, Inc. (CCME), whose shares fell 53 cents, or 4.3%, to $11.88 before the trading halt shortly after 10 a.m. ET. on Friday, announces resignation of independent auditor, Deloitte Touche Tohmatsu, and CFO Jacky Lam, effective immediately. The company also announced it will delay its Q4 earnings release and will not file its Form 10-K for the fiscal year ended December 31, 2010 by March 16, 2011, its original due date.
China MediaExpress, which operates a television advertising network on buses in China, has come under attack from short-sellers claiming substantial fraud. In its resignation letter the company’s registered independent auditor, Deloitte Touche Tohmatsu (“DTT”) stated that “DTT was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation. DTT’s letter also stated that these issues may have adverse implications for the prior periods’ financial reports and that, in their view, further investigatory procedures would be required to determine whether the prior periods’ financial reports are reliable. Upon receipt of the formal DTT resignation letter, China MediaExpress requested the suspension of trading in the company’s common stock on the NASDAQ Global Market to permit full disclosure of DTT’s resignation to be disseminated to the public.
CCME’s Board of Directors said it met over the weekend of March 12-13 and confirmed its intent to authorize an independent committee of the Board to launch an investigation with respect to the concerns of DTT.