Shares of Ericsson (NASDAQ: ERIC) fell 5.7 percent to $7.55 on Friday as the prospects of a large fine looms from the U.S. Securities and Exchange Commission, according to Reuters. The SEC has begun a separate investigation into Ericsson’s possible dealings with nefarious groups in Iraq. The company launched its own internal investigation in 2019, and found payments had been made to the Islamic State militant group in Iraq. Ericsson was fined $1 billion by U.S agencies in 2019 as part of settlement and entered a deferred prosecution agreement.
Ericsson issued a statement on Friday, saying it was giving the SEC its full cooperation, adding it was “too early to determine or predict the outcome of the investigation.” Since February, the company has lost roughly a third of its market value, according to analysts.
Reuters quoted analysts from Jefferies Group who issued a statement, saying: “We believe the combined penalty to be paid in this round of investigations is likely to be somewhat higher than the previous one, in light of the repetitive misconduct, the breach of the DPA and the corruption being in Iraq,” Jefferies analysts said in response to news that the SEC was investigating.
Ericsson has had a change in management since the initial fine, spurred by irate investors. The company drew the attention of the SEC for not sharing its full internal report on the matter.
Reader Interactions