Scandal-hit Toshiba faces investor sueball over accounting woes

Share price slides 40 per cent, lawsuits start flying

Ailing Japanese corporation Toshiba is the target of a lawsuit from embittered shareholders over the stock price crash that resulted from a multi-billion dollar accounting debacle.

Some fifty individuals have sued the organisation as well as with three former CEOs and two ex-CFOs for 301.99 million yen (£1.62m) in damages, according to documents filed at the Tokyo District Court.

The legal spat follows an accounting probe in April that led Tosiha to admit it had inflated profits by $1.2bn since the start of the global financial crisis, thanks to overly ambitious profit targets and a culture that prevented staff from questioning executives’ poor decisions.

In the intervening months Toshiba's stock price has slumped 40 per cent compared to the original value before the troubles emerged – a point investors aren’t willing to accept without compensation.

“Toshiba falsified its financial statements and misled stockholders,” the lawsuit alleges, according to Reuters. “Toshiba’s fraud has done immeasurable damage to the trust in a stock company system.”

This is the first of many lawsuits to hit the corporation, one lawyer said at a news briefing, who claimed as many as 1,000 Toshiba investors across Japan could launch cases.

In another related move, Japanese stock market watchdog, the Securities and Exchange Surveillance Commission, today recommended to the Financial Services Agency that Toshiba be fined almost $60m for the accounting calamity.

Irrespective of the scandal, Toshiba’s PC and TV businesses have fared badly in 2015, with current chief exec Masashi Muormachi mulling cuts to the workforce to counter falling sales and deepening losses. He admitted in October the businesses had “lost earning power” and this meant it needed to “urgently take action”.

Toshiba used to be the world's number one notebook maker – but that was 15 to 20 years ago, and since it has fallen down the ranks. Some might say it languishes on the sidelines.

At the end of last week, reports surfaced that Toshiba, along with Fujitsu and the private equity people behind Sony’s former VAIO brand, were thinking of making a go of it together in Japan.

The backers of VAIO took the business private last year and retrenched to Japan as it stemmed the unit’s losses, and has already started to spread its tentacles into the US.

As for Toshiba, the PC division has already gone through a series of cost cutting exercises, with most of the original senior management team in Europe exiting the business. Clearly the business needs to find some way forward.

Over at Fujitsu, the PC and mobile business units are being spun out of the over-arching product division. The company said this is to give them more autonomy – and insists it is not selling them off. ®

Similar topics

Other stories you might like

  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading
  • Big Tech loves talking up privacy – while trying to kill privacy legislation
    Study claims Amazon, Apple, Google, Meta, Microsoft work to derail data rules

    Amazon, Apple, Google, Meta, and Microsoft often support privacy in public statements, but behind the scenes they've been working through some common organizations to weaken or kill privacy legislation in US states.

    That's according to a report this week from news non-profit The Markup, which said the corporations hire lobbyists from the same few groups and law firms to defang or drown state privacy bills.

    The report examined 31 states when state legislatures were considering privacy legislation and identified 445 lobbyists and lobbying firms working on behalf of Amazon, Apple, Google, Meta, and Microsoft, along with industry groups like TechNet and the State Privacy and Security Coalition.

    Continue reading
  • SEC probes Musk for not properly disclosing Twitter stake
    Meanwhile, social network's board rejects resignation of one its directors

    America's financial watchdog is investigating whether Elon Musk adequately disclosed his purchase of Twitter shares last month, just as his bid to take over the social media company hangs in the balance. 

    A letter [PDF] from the SEC addressed to the tech billionaire said he "[did] not appear" to have filed the proper form detailing his 9.2 percent stake in Twitter "required 10 days from the date of acquisition," and asked him to provide more information. Musk's shares made him one of Twitter's largest shareholders. The letter is dated April 4, and was shared this week by the regulator.

    Musk quickly moved to try and buy the whole company outright in a deal initially worth over $44 billion. Musk sold a chunk of his shares in Tesla worth $8.4 billion and bagged another $7.14 billion from investors to help finance the $21 billion he promised to put forward for the deal. The remaining $25.5 billion bill was secured via debt financing by Morgan Stanley, Bank of America, Barclays, and others. But the takeover is not going smoothly.

    Continue reading

Biting the hand that feeds IT © 1998–2022