The Tokyo Stock Exchange plans to probe Nissan Motor Co. over alleged financial misconduct by former Chairman Carlos Ghosn, according to informed sources.
The TSE will examine the matter in detail, including the background and Nissan’s internal management system, based on the exchange’s listing rules. It also plans to conduct hearings with Ernst & Young ShinNihon LLC, the automaker’s auditor.
Ghosn and former Nissan Representative Director Greg Kelly were arrested last week for their alleged involvement in underreporting Ghosn’s pay by some ¥5 billion in securities reports over the five years through fiscal 2014.
The TSE will consider possible punitive measures against Nissan.
Under the TSE’s listing rules, companies that falsify securities reports can be delisted from the exchange.
The whole picture of the latest case is not yet fully clear, but at this point many experts believe the automaker is unlikely to be delisted.
Even if Nissan escapes delisting, it may be put on the TSE’s watch list if the bourse sees a high need for improvement in the company’s internal controls.
The TSE put Toshiba Corp. on the watch list after accounting irregularities at the electronics and machinery maker came to light in 2015. It took two years and a month for Toshiba to be removed from the list.
ShinNihon was also the auditor of Toshiba at the time of the accounting scandal. The Financial Services Agency ordered ShinNihon to suspend part of its operations at the end of 2015 for its failure to detect Toshiba’s accounting fraud.