Chantal Auditors Resign; Stock Plunges 30%

Shares of wrinkle cream maker Chantal Pharmaceutical Corp. lost nearly 30% of their value Tuesday after auditors abruptly resigned without explanation.

The departure by accounting firm Coopers & Lybrand followed a string of bad news centering on the company’s sales and its inability to produce final and timely financial reports.

Just last month, Chantal’s chief financial officer, Gary Burnison, resigned for what he called “strictly personal reasons.” Reached Tuesday, Burnison declined to comment further.

Los Angeles-based Chantal shares closed down 81.25 cents at $2.687 as more than 1.2 million shares changed hands in Nasdaq trading. But the loss seems minuscule considering Chantal’s price was above $28.125 last year.

Chief Executive Chantal Burnison, who is unrelated to the former chief financial officer, told Reuters that she is “disappointed and frustrated” with the inability to get clear and audited financial statements released.

“The product is selling wonderfully and reorders are there. We know we have a strong company product-wise. It’s just that we need to get the auditors to speak to our financials,” Burnison said.

She said Coopers declined to give her a specific reason for dropping the account, telling her only that the firm made the decision at a regular review of all its accounts. “The good news is they didn’t find anything wrong,” Burnison said.

A new chief financial officer could be named within 48 hours, she said, adding that one of the new officer’s first priorities will be to retain new auditors.

Chantal’s problems date back to January, when some market players, including short sellers who essentially bet that the stock would lose value, began questioning whether Chantal was actually earning the revenue it booked.

Chantal ships products to its U.S. distributor and books the shipments as sales. But some market watchers question that practice and say it does not account for product returns.