Updated from 12:06 PM EDT.
NEW YORK (TheStreet) -- Shares of MDC Partners (MDCA) are dropping 13.86% to $19.82 on heavy trading volume on Friday afternoon, after short seller Gotham City Research said the advertising holding company's shares are worth less than $1 per share.
"We find MDCA's accounting highly disturbing," the firm's David Yu told CNBC.com. He also confirmed a short position on the stock.
Last year, MDC's founder and CEO Miles Nadal stepped down after the company revealed an SEC investigation into his expenses and the company's accounting practices, CNBC.com noted.
"MDCA shares are worth less than $1.00 per share, implying 96%+ downside," the report from Gotham City said, "MDCA will restate several years' historical results as a result of the issues covered in this report and elsewhere. The on-going SEC investigation will lead to new revelations of wrong-doing."
The company's stock plunged more than 23% immediately following the report before it was halted for downside volatility, CNBC.com added.
MDC told TheStreet that "management is confident in its financial reporting and accounting practices, and intends to defend itself against the false and misleading accusations of this short seller report, which is solely focused on destroying the value we are creating for our shareholders for their own personal gain."
About 5.12 million of the company's shares were traded so far today, much higher than its average volume of 360,885 shares per day.