Renren's audit committee chair quits ahead of IPO

By Clare Baldwin

NEW YORK (Reuters) - The head of the audit committee at Renren Inc has resigned to protect the Chinese social networking company from any possible fallout from accusations of accounting fraud at another company where he is an executive.

Derek Palaschuk, chief financial officer of China-based Longtop Financial Technologies Limited, told Reuters in an interview on Monday that he formally resigned from Renren's board of directors over the weekend.

Palaschuk was an independent director for Renren, responsible for chairing its audit committee.

Renren is due to hold an IPO on Tuesday that is expected to raise about $690 million at the mid-point of the price range.

The shares of Longtop fell as much as 34 percent last week after an April 26 report about Longtop by Citron Research, which researches stocks and sometimes takes positions in them.

Longtop's stock opened at $25.47 on April 26, the day Citron published its report. It fell as low as $16.71 on April 27. The stock closed on Monday at $22.40.

In the report, Citron raised questions about what it called Longtop's "unconventional staffing model," gifts of stock made by Longtop's founder and chairman Hiu Kung Ka to employees and friends, and accused Longtop of having "supersized margins."

Longtop provides software and services to financial institutions in China.