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Sept 29 (Reuters) – FalconStor Software Inc (NASDAQ:FALC) said on Wednesday its Chief Executive ReiJane Huai resigned following his disclosure of certain alleged improper payments in connection with the company’s contract with a customer, sending its shares down as much as 34 percent.

FalconStor named current Chief Strategy Officer James McNiel as its interim CEO and said a special committee of the Board has been formed to conduct an internal investigation of the matter.

In addition to his present role as Chief Financial Officer, James Weber was appointed interim chief operating officer, the company said in a statement.

The Melville, New York-based company said it would continue to cooperate with law enforcement authorities with respect to the ongoing investigation.

As of Tuesday, the stock had recovered as much as 59 percent after hitting a 52-week low on June 29. (Reporting by Tenzin Dekeva in Bangalore; Editing by Vyas Mohan)