The auditor of a large Chinese chemical company that was the subject of an Associated Press investigation and is backed by Morgan Stanley has resigned amid accounting concerns.
Tianhe (pronounced TYEN'-huh) Chemicals Group came under fire last summer. An AP review corroborated concerns from anonymous critics betting against the company's stock that Tianhe's business might be less impressive than the company represented.
The company's problems highlight how regulators and investors depend on investment banks to vet companies entering public markets. Various parts of Morgan Stanley invested $300 million in Tianhe, sold its shares to the public and recommended the company to investors.
Tianhe says it is looking for another auditor. Trading of its shares has been halted since March. Neither the company nor Morgan Stanley returned calls seeking comment.