Shares of US telecom company WorldCom fell sharply after the US Securities and Exchange Commission (SEC) requested documents regarding loans and financial practices.
WorldCom shares fell 12 per cent to close at $7.93. The shares tumbled as much as 19 per cent earlier in the day in trading on the Nasdaq.
WorldCom chief executive Mr Bernie Ebbers says the company's accounting practices comply with all regulations.
WorldCom, the second-biggest US long-distance company, says it will furnish all information sought by the SEC.
It also says its policies, practices and procedures are in accordance with the law and it is not aware of information that would give rise to the SEC inquiry.
In a letter last week, the SEC told WorldCom the inquiry is "confidential and should not be construed as an indication by the Commission... that any violation of law has occurred."
In an interview with CNBC on Monday, Mr Ebbers said part of the SEC request was related to a $340 million loan the company gave him to buy company shares.
The SEC made 24 requests of WorldCom, including that the company turn over documents for the quarter ending in September 2000.
The inquiry also focuses on disputed customer bills and sales commissions, loans by WorldCom to officers or directors, customer service contracts and organisational charts and personnel records for former employees.
The requests were made after WorldCom auditors revealed in February that six to 12 sales people boosted their commissions by as much as $4 million through unethical practices.
PA