Ericsson was notified by the U.S. Securities and Exchange Commission (SEC) that an investigation has been opened regarding the company’s 2019 Iraq investigation report.
“It is too early to determine or predict the outcome of the investigation, but Ericsson is fully cooperating with the SEC,” the company said in a statement Thursday.
Swedish analyst Daniel Djurberg of Svenska Handelsbanken told Bloomberg that the alleged misconduct could trigger fines in the range of $100 million to $300 million.
Ericsson’s leadership has been expecting fines of some sort. During the company’s first quarter earnings call, Ericsson President and CEO Borje Ekholm said the company was “engaging” with the U.S. Department of Justice (DoJ) over its handling of the bribery investigation in Iraq and that it would likely be fined and possibly face other actions.
Ericsson disclosed in February that an internal investigation found that the company may have made payments to the ISIS terror organization to gain access to certain transport routes in Iraq. The investigation examined the conduct of Ericsson employees, vendors and suppliers in Iraq from 2011 to 2019. Some employees were fired as a result.
Shares in Ericsson were down about 2.5% this morning, trading in the $8 range. Reuters noted that Ericsson has lost about a third of its market value since February.
Citing Danske Bank Credit Research analyst Mads Rosendal, the Reuters report also said that the new probe could mean further delays in Ericsson’s $6.2 billion deal to buy U.S. cloud communications firm Vonage. That deal was expected to close in the first half of the year but has been postponed to August.
Shares in Vonage were down about 1.7% this morning.