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Everyone knows what went wrong with Imax Coporation (NYSE:IMAX) yesterday: they offered the company up for sale, they didn't get a buyer at the price they wanted ($12-14), their accounting is in some dispute with the SEC, and, as a result of those first two, the class action lawyers are circling like sharks.

Which just goes to show you how bad a company can perform even when their business is on track and their profits are growing. And that's why I'm selling some shares today as part of my overall margin reduction initiative.

I don't like that I sold IMAX . I'm still holding the shares that I purchased for a retirement account at $6.20 following the disappointing no-buyout news. I thought those shares were a bargain then, and I still think that's well below a fair price for the company.

But given the confusion about their accounting and the risk that their accounting problems will actually develop into something signficant (at this point, it's just a question of recognizing revenue during construction of their theaters, which is a timing issue that I don't much care about), I can't justify borrowing money to hold the shares in my margin account any longer.

The fact that the CFO resigned adds a little more urgency to the situation, and may explain why the shares remain in freefall, but I think it's as likely that he was a sacrificial lamb or that he made a simple mistake as that there was any real chicanery going on.

I sold a bit less than half of my overall IMAX holdings, and cleared out all of the shares that I held on margin. This sale brought a loss, of course, so at least it will help me to write off some of the profits I'm taking in other positions. The Imax shares I sold yesterday were purchased at an average price of $7.30, and were sold yesterday morning at $4.99 for more than a 30% loss.

Source: IMAX Accounting and Legal Woes Make It a Sell