The Mitsubishi Trust has recently announced that it will be pursuing legal action in response to the news that Toshiba has been inflating profits over the past 8 years, the group reports.
In the suit, Mitsubishi is asking for over $8.7M attributed to the client losses caused by the accounting scandal. The fraud was determined to have impacted over $1.3B dollars in revenue. The news of the scandal caused a large drop in the share price of Toshiba which affected the Mitsubishi pension fund.
In response the number of lawsuits, Toshiba has announced that it will sell off a portion of its memory chip business which will allow the company to finance the litigation and punitory costs associated with the suits. Since the discovery an announcement were made, over 15 separate lawsuits have been filed seeking compensation for losses attributed to the negligence and fraud within Toshiba.
This would be on top of the recommended $60M fine imposed by Japanese authorities and put the company in a difficult position. This scandal causes shareholders and potential investors to be wary of investing in the company and devalues public perception which could hurt one of the company’s many lines of business. Similarly, inflating profits is looked upon poorly by investors who see a retroactive reduction in investment value as well as a betrayal to the company’s public owners.
Source: http://www.reuters.com/article/us-toshiba-accounting-idUSKBN15E03A?il=0