The accounting bungling at Diamond Foods Inc (NASDAQ:DMND) cost the company’s Chief Executive Officer and Chief Financial Officer their jobs and puts in jeopardy the company’s prospects of acquiring the prized Pringles brand from Procter & Gamble (NYSE:PG).

Diamond sells Emerald snack nuts and Pop Secret popcorn. Its board placed CEO Michael Mendes and CFO Steven M. Neil on administrative leave, after a three-month probe involving the SEC, which found that about $20 million in “continuity” payments made to walnut growers in August 2010 and about $60 million in “momentum” payments in September 2011 weren’t accounted for in the correct periods.

The deal last year to acquire Pringles for $1.5 billion may now have to be shelved as P&G reserves the right to terminate it if it can prove that the financial restatements would have a “material adverse effect” on Diamond’s business. According to the agreement, any change in senior management that could negatively impact the business would also constitute a material adverse change. The announcement caused a decline of more than 44 percent in Diamond’s stock value yesterday.

Here’s how these stocks are reacting to the news today:

Diamond Foods, Inc. (NASDAQ:DMND): DMND shares recently traded at $23.69, down $12.97, or 35.38%. They have traded in a 52-week range of $26.11 to $96.13. Volume today was 18,902,237 shares versus a 3-month average volume of 2,603,790 shares. The company’s trailing P/E is 10.79, while trailing earnings are $2.22 per share.

Procter & Gamble Co. (NYSE:PG): PG shares recently traded at $63.60, down $0.04, or 0.06%. They have traded in a 52-week range of $57.56 to $67.72. Volume today was 2,029,188 shares versus a 3-month average volume of 10,683,400 shares. The company’s trailing P/E is 18.74, while trailing earnings are $3.40 per share.

To contact the reporter on this story: Damien Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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