Marvell Technology's auditor has resigned and now the stock is crashing.
In a filing with the SEC on Monday night, Marvell Technology, a $5 billion semiconductor company, disclosed that PricewaterhouseCoopers resigned as its auditor on October 20.
In after hours trade on Monday, shares of Marvell were off 15.3% to trade as low as $8 per share. The stock closed at $9.44 on Monday.
Marvell said in its filing that its audit committee didn't request, recommend, or approve the resignation of PwC.
Said another, PwC stepped away from the account on its own accord.
PwC advised Marvell that in 2016 it will need to expand the scope of its audit in 4 areas:
- Entity level controls, including whether senior management’s operating style resulted in an open flow of information and communication to set an appropriate tone for an effective control environment
- Process and controls over establishment of significant and judgmental reserves, including reserves for litigation and royalties
- Process and controls over identification, communication and approval of related party transactions, including assignment of intellectual property rights
- The adequacy of financial reporting resources, including sufficient personnel with appropriate knowledge, expertise and training commensurate with Marvell's corporate structure and financial reporting requirements
In the filing, Marvell said that PwC's audit reports for fiscal years ending February 1, 2014 and January 31, 2015 did not contain an adverse opinion and the company added that no disagreements existed between it and PwC.
So far this year, Marvell shares are off about 35%.
And so while Marvell's filing doesn't explicitly contain any red flags, something investors definitely don't like to see is the company that gets the closest look at its financial information resigning.
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