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Well, this can’t be good. Quest Software (QSFT) on Friday announced the resignation of M. Brinkley Morse, senior vice president, corporate development, after he refused to be interviewed by the special committee of the company’s board investigating its stock options granting practices. Morse had been the company’s chief financial officer from January 2001 to April 2005, according to the company’s Web site, which still has a bio for Morse on its management page. Friar has a Neutral rating on the stock.

ADDENDUM: Goldman Sachs’ Sarah Friar wonders if CEO Vinny Smith might eventually leave the company as well; if he did, she says, it would not be good news for the company or the stock:

Today’s announcement may heighten anxiety levels about the outcome for the CEO – the special committee’s investigation remains ongoing, and as such, this question is not yet put to rest…Our conversations with the company suggest that the special committee is nearing the completion of its grant date investigation; the next step would be compiling the necessary restatements. We note that our LBO analysis suggests a take-out value in the range of $16-$19, which should provide some support for the shares.

Source: Quest Software Exec: 'No Interviews - I Quit'