More Trouble Mounts at Diamond Foods (DMND, PG)

Diamond Foods, Inc. (NASDAQ: DMND) has gone from a story of great growth to growing pain.  And in the scenario of the latter, shares are getting spanked on news from the Wall Street Journal that federal prosecutors have opened an investigation into the payments made to walnut growers.  The deal potentially jeopardizes the Pringles acquisition from Procter & Gamble (NYSE: PG) and that could leave Diamond Foods in the lurch.  This is a situation where everything that could go wrong has gone wrong, including the suicide of a director who was tied very closely to the issues related to walnut growers.  Some analysts have defended Diamond Foods and some have abandoned it.  What seemed like a potential problem has escalated into a serious problem and outsiders have to leave it up the imagination about what the payment issues to walnut growers were that have killed this former great growth story. 

Diamond Foods is trading down 12% at $29.30 in the after-hours session. (At least their almond milk is still good!)