Shares of Diamond Foods (NASDAQ:DMND) opened almost 14% lower on Wednesday to a new 52-week low as investors continued to digest grim news that company director Joseph Silveira died last week of an apparent suicide.
Shares of Diamond were down as much as 17% after-hours on Tuesday when news hit that Silveira may have died from a self-inflicted gunshot wound. The San Francisco-based maker of Kettle potato chips and other snack foods had initially posted his death on Nov. 17.
A member of Diamond’s audit committee and manager of its walnut properties, Silveira recently recused himself from the committee’s investigation into how Diamond accounted for its walnut-crop payments, according to media reports.
The news follows a report by Barron’s earlier this month that pointed out how Diamond Foods’ shares have dropped by half since analyst Mark Roberts raised accounting questions. Roberts had also raised concerns over Diamond’s share price and claimed the company had no tangible book value.
An investigation by the Diamond audit committee into how Diamond accounted for its walnut-crop payments caused the company to postpone its planned $1.5 billion acquisition of Pringles from Procter & Gamble (NYSE:PG). P&G shareholders were offered Diamond shares in exchange for the Pringles business.
A day after news of a possible suicide were reported, law firm Hagens Berman said it would deepen its investigation of Diamond Foods’ accounting practices and payments to walnut growers for securities violations. Other law firms have been filing suits against Diamond over the last few days on behalf of the shareholders.
However, a company spokesperson would not comment on whether the death was suicide related or whether it was connected to the questionable accounting.
"Any suggestion that his passing was somehow related to the accounting investigation by people seeking to profit by spreading such unfounded rumors is demeaning to his legacy," the spokesperson said.
In a statement released last week, Diamond CEO Michael Mendes said the company was “deeply saddened” by Silveira's passing, highlighting his “distinguished history with Diamond Foods” that traces back to service on the board of its processor company.
“His many contributions to Diamond Foods and the California grower community, in which he was deeply involved, will be remembered by all who knew him,” he said.