Following the profits inflation scandal that hit Japanese tech company Toshiba, the Securities and Exchange Surveillance Commission (SESC) has recommended that a fine of about 7.37 billion yen ($60 million) be imposed on the Tokyo-based firm to serve as deterrence to others - the BBC reports.
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Financial investigations carried out by relevant authorities revealed that Toshiba had inflated its annual profits by $1.3 billion over a 7-year period.
The Financial Services Agency (FDA) is the authority empowered under the law to impose penalties on companies that commit such infractions, and the SESC has written to it to fine Toshiba for this violation.
If the Financial Services Agency goes ahead to implement SESC’s recommendations, then the fine would be the largest ever imposed on any company in Japan for violations related to financial accounting. In 2008, a penalty of 1.6 billion was imposed on IHI, an industrial conglomerate, for a related financial infraction.
While it is not know whether the FSA would agree to fine Toshiba up to this amount, it has always been known to agree with recommendations made by SESC over such matters.
Meanwhile, Toshiba was expectant that it would be fined for the violation, and announced that it has put the sum of 8.4 billion yen to settle any imposed penalties.
Funny enough for Toshiba, the fine recommendation made by SESC was made the same day 50 shareholders of the company filed a lawsuit asking for $2.45 million damages for loss in stocks value emanating from the accounting scandal.
The 50 shareholders of the company are suing Toshiba and three former top officers as well as two finance chiefs of the tech company.
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It must be recalled that Toshiba’s CEO, president, and 6 other executes left the company in July over profits inflation scheme that cut across several years. And since its accounting malpractice surfaced in April this year, the stocks of the company dropped by 40% and it posted a net loss in September.