NQ Mobile In Possible Short Squeeze; Muddy Waters Sticks To Guns
NQ Mobile (NYSE: NQ) shares showed signs of a short-squeeze Friday as the stock has surged 12 percent.
Nearly a quarter of the Chinese Internet company's shares are held as short interest and the stock was trading at nearly double the average full-day volume before noon Friday.
But the most vocal short seller, Carson C. Block's Muddy Waters Research, refused to back down, which characterized news earlier Friday that the company had switched auditing firms was a "fraud."
NQ dismissed PricewaterhouseCoopers and replaced it with Marcum Bernstein Pinchuk, saying the move may speed the filing of a delayed 2013 annual report.
Block, in an email to media outlets Friday, said PwC's "refusal to issue an audit opinion results from the fact NQ is a fraud."
Block added that "by not issuing any opinion, PwC affected a backdoor resignation that attempts to save face for its client."
Following news of the auditor switch at 7 a.m., NQ fell sharply in pre-market trading. It began a steep climb almost as soon as the market opened.
NQ said there are no auditing disagreements with PwC, but additional procedures recently proposed by PwC "may create risk" regarding a speedy filing of its long-delayed annual report to the Securities and Exchange Commission for 2013.
PwC had proposed the additional procedures concerning the June 4 results from an independent board committee's probe of earlier allegations that Block made in October.
The committee said it found no evidence fraud.
NQ traded recently at $4.87, up 11.95 percent.
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