Toshiba could face record-breaking fine of 7.37bn yen (£40m) following false statements about its profits

Hayley Kirton
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Earlier in the day, shareholders sued Toshiba for losses from tumbling share price (Source: Getty)

Japanese technology giant Toshiba could be slapped with a fine of 7.37bn yen (£40m) for false statements about its profits.

The Securities and Exchange Surveillance Commission (SESC) today made a recommendation for the fine to the Financial Services Agency (FSA).

The accounting scandal first came to light in April when questions were raised around the company's accounting practices which overstated profits by 155bn yen over the course of seven years.

The proposed penalty will still need approval from the FSA. If the fine is approved, it will be the largest fine in Japan for accounting violations, exceeding a fine of 1.6bn issued to IHI in 2008.

However, Toshiba has already put aside roughly 8.4bn yen to cover possible penalties.

Earlier in the day, a group of shareholders sued the company for 302m yen in damages, after Toshiba’s share price tumbled following the revelation of the accounting scandal.

Share price for the company has fallen by over 30 per cent in the last six months alone.

Toshiba’s accounting missteps have come to light not even five years after fellow Japanese manufacturer Olympus’s own accounting scandal.

In 2011, Olympus’s former British chief executive Michael Woodford brought irregularities in the accounts to the attention of the authorities after he was let go from the company.

The Serious Fraud Office dropped its case into Olympus’s British subsidiary last month, after the Court of Appeal decided in February that misleading auditors was not a criminal offence under English law.

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