Japan Wind Plunges a Second Day After Bourse Puts Stock Under Surveillance

Japan Wind Development Co., the worst performer on the 88-member WilderHill New Energy Global Innovation Index in the last year, plunged a second day after the stock was put under surveillance by the Tokyo Stock Exchange.

The shares dropped by 30,000 yen, or 21 percent, to 113,600, the lowest close since at least 2003. Yesterday they sank 40,000 yen, or 22 percent, after the stock was placed on the so-called monitoring post for possible delisting.

Japan Wind is likely to miss a June 30 deadline to file an annual securities report because it changed its auditor, the company said in a June 14 filing. If it fails to submit the report within a month of the deadline, the shares will be delisted, the bourse said in a statement the same day.

Japan Wind dismissed Ernst & Young ShinNihon LLC after the auditor rejected the findings of an internal investigation, according to the filing. Japan Wind had set up a committee of outside experts to look into three memoranda an employee wrote to clients undertaking to supply turbines and batteries without the company’s approval.

The committee found that the memos weren’t legally binding and didn’t pose inventory or procurement risks, according to the statement.

‘Contradictory Explanations’

“Given changing and contradictory explanations, our doubts about the facts regarding the memos haven’t been resolved,” Ernst & Young ShinNihon said in a statement sent to Japan Wind and released by the stock exchange after trading closed today. “We repeatedly asked the company for explanations and to take appropriate measures, including reviewing its earnings” for the year ended March 2010.

Calls to Tokyo-based Japan Wind seeking further details yesterday and today weren’t returned. The shares have slid 55 percent this year compared with the 4.5 percent retreat in the benchmark Nikkei 225 index.

“It’s hard to see when the shares will reach bottom as there is the potential risk of being delisted,” Tomoaki Kawasaki, an analyst at Cosmo Securities Co., said by phone from Tokyo. “The market doesn’t like a company whose management may have a systematic problem like this.”

Japan Wind has appointed Yayoi Audit Corp. to replace Ernst & Young ShinNihon. The company will hold an extraordinary shareholders meeting to discuss the securities report July 29, according a statement June 14.

Companies are required to file an audited securities report to Japan’s finance ministry providing details including assets, earnings, and number of employees within three months of the end of the financial year.

To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

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