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As the U.S. SEC starts its investigation, fears of a bigger fine cause Ericsson shares to fall.

A few years ago, U.S. agencies looked into the company. As a result, Ericsson had to pay a $1 billion fine in 2019 to settle a bribery case. It also had to sign a deal to delay prosecution (DPA).

In response to the news that the SEC was looking into something, analysts at Jefferies said, “We think the total penalty for this round of investigations is likely to be a bit higher than the last one, given the repeated wrongdoing, the breach of the DPA, and the corruption in Iraq.”

The Justice Department (DoJ) had already started doing this.

The 2019 investigation by Ericsson is at the heart of the controversy, which began in February. This showed that money had been sent to the militant group, Islamic State in Iraq.

Even though the wrongdoing didn’t happen under the current management, the company didn’t give the DoJ the whole report, which made the DoJ look into it.

Investors were upset, so they voted against letting board members off the hook for 2021. The members of the board could be held personally responsible for what they did.

Since February, Ericsson has lost about a third of its market value. Analysts say that any possible fine is probably already priced into the stock price, but it does create an overhang until a settlement is reached.

They think that a settlement is not likely to happen this year, and it could even stop Ericsson from buying Vonage, an American cloud communications company, for $6.2 billion.

The deal was supposed to end in the first half of the year, but now it won’t end until August.

A Danske Bank Credit Research analyst named Mads Rosendal wrote that the new investigation “could also mean more delays to the Vonage acquisition, which we now think has a slightly higher chance of being cancelled.”

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