NMC Health Plc, a hospital operator targeted by short seller Muddy Waters, said founder Bavaguthu Raghuram Shetty resigned amid a review into whether he misrepresented his holdings in the company.
Co-chairman Shetty stepped down with immediate effect, along with chief investment officer Hani Buttikhi and board member Abdulrahman Basaddiq, the company said.
Last week, NMC removed Shetty from board meetings on concerns he misstated his stake. The stock fell as much as 9.2 per cent on Monday.
NMC shares lost almost half their value the first week of February on speculation that the company’s main investors were facing a margin call, in which banks seize shares pledged as collateral.
NMC said on Friday that First Abu Dhabi Bank and Al Salam Bank Bahrain obtained 20 million shares in the company from BRS International Holding, an investment vehicle of NMC’s top shareholders.
The banks sold more than 8 million shares as “enforcement of security,” NMC said.
Shares of NMC, which operates the largest medical network in the United Arab Emirates, started teetering in mid-December when Muddy Waters alleged that NMC manipulated its balance sheet and inflated the prices of companies it acquired.
Almost 10 per cent of NMC’s freely traded shares are shorted, according to Markit Securities data. In mid-December about a third of them were.
Last week, GKSD Investment, an investment company backed by hospital investors, said it’s studying a possible offer for the London-listed company.
NMC has said Muddy Waters’s claims are false and the company hired former FBI Director Louis Freeh to conduct an independent review.
NMC said Mark Tompkins will continue as the company’s sole chairman.