The Securities and Exchange Surveillance Commission said Monday it has recommended that the Financial Services Agency order home improvement firm Painthouse Co. to correct a mandatory earnings report.

The SESC made a similar recommendation last July after legal authority to inspect mandatory earnings reports was transferred to it from local FSA bureaus and the Finance Ministry.

Such an order would be the first since 1971.

According to the SESC, Painthouse avoided posting a second consecutive year of negative net worth for the year to August 2005 by falsely booking a 11.7 billion yen gain it had through debt forgiveness as profit.

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