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What: Shares of oil exploration company Cobalt International Energy (NYSE: CIE) are sinking quickly, currently down 11%, following allegations of wrongdoing over the weekend from the Financial Times.

So what: The Financial Times report claims that a former top executive at Cobalt, along with an Angolan state official, held shares in Nazaki Oil & Gas, Cobalt's local partner in deepwater drilling, without disclosing the position. In February, Cobalt acknowledged that the Securities and Exchange Commission was investigating possible ties between its Angolan drilling partner and senior government officials. Cobalt has thus far denied any wrongdoing on that matter.

Now what: This is just another gray cloud in the sky for Cobalt, which has a lot of questions to answer over the coming months. Earlier in the year I questioned whether Cobalt was worth as much as the market was valuing it, especially since it hasn't produced a single dollar in revenue yet. The allegations over the weekend serve as another dent in the armor and continue to keep me far, far away from this stock. Until I see some tangible results, I'm sticking with my opinion that Cobalt is grossly overvalued.

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