Toshiba Facing Two US Probes, Report Says; Stock Plunges In Tokyo

Shares of Toshiba fell by as much as 10 percent on the Tokyo Stock Exchange after a report said the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) were both examining allegations of fraud against the Japanese conglomerate. The stock was trading about 5 percent higher before the news report.

The company had admitted in early 2015 to inflating its reported profits over seven years, totaling to about $1.3 billion. The accounting scandal had led to a record fine of $62.1 million by the Japanese securities watchdog, as well as the departure of former CEO Hisao Tanaka.

U.S. authorities are now looking at the allegations of fraud, even though Japan has already investigated Toshiba’s accounting practices, fining both the company and its former auditor, Ernst & Young ShinNihon, Bloomberg reported.

The probe by the DOJ and SEC, reported by Bloomberg citing unidentified sources, could mean Toshiba may face further enforcement action in the U.S. The fraud allegations involve Toshiba’s Westinghouse Electric Co. unit in Pennsylvania, which partly allows U.S. authorities to exert jurisdiction over the case.

Toshiba’s shares had recovered somewhat on Thursday afternoon, trading about 8 percent lower at 2:15 p.m. local time (1:00 a.m. EDT).