NEW YORK ( TheStreet) -- Shares of Diamond Foods ( DMND) were walloped Wednesday as questions about the death of a former director stoked investor fears that a probe of the company's accounting could lead to the restatement of past financial results.

The San Francisco-based snack products company, whose brands include Pop Secret popcorn and Emerald nuts, acknowledged that Joseph Silveira passed away late last week and press reports late Tuesday indicated Silveira may have committed suicide.

The stock closed down 21% at $27.80 on volume of 9.7 million, nearly 10 times the issue's trailing three-month daily average of around 1 million.

Jefferies, which has a buy rating and 12-month price target of $46 on Diamond shares, took a measured view of the situation, acknowledging the questions about Silveira's passing add to the uncertainty engulfing the stock but cautioning against making any snap assumptions.

"While this might be seen as another indication of accounting problems we do not want to jump to conclusions," the firm said. "Our worst-case DCF discounted cash flow value of $39 from last week is still valid."

The trouble started for Diamond on Nov. 1 when the company announced the closing of its acquisition of the Pringles snack brand from Procter & Gamble ( PG) would be delayed because Diamond's audit committee had received an "external communication" questioning the company's accounting for certain crop payments to walnut growers.

In response, Diamond's audit committee embarked on a probe of the matter, and the projected closing of the Pringles deal was pushed back to the first half of fiscal 2012 from the original expectation of this December.

Prior to the news, Diamond shares were trading in the low-$60 range, but they promptly fell to $52.79 on Nov. 2, a plunge of nearly 18%. By Nov. 14, the stock was down to the mid-$30s, where it stayed until Wednesday's plunge.

Jefferies acknowledged that the timing of Silveira's death was concerning but noted how little is really known about the circumstances surrounding the incident and whether personal issues could have played a part. The firm added however that Silveira was removed from the audit committee earlier this month because of the potential for a conflict of interest with the accounting probe because he managed walnut properties.

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