Japan’s Securities and Exchange Surveillance Commission (SESC) has launched a formal investigation into Nidec Corporation, the Kyoto-based electric motor manufacturer, following the discovery of widespread accounting irregularities that have shaken investor confidence in one of the country’s most prominent industrial companies. The SESC will examine whether Nidec made false statements in its securities filings in violation of Japan’s Financial Instruments and Exchange Act, according to sources with knowledge of the matter.
The watchdog’s probe centres on accounting misconduct that a third-party investigation committee, established by Nidec in September last year, documented in a report released in March. That report identified founder and former chairman Shigenobu Nagamori as bearing primary responsibility for the irregularities, concluding that excessive pressure on staff to meet performance targets was a key driver of the misconduct. Third-party investigators have identified more than 1,000 instances of improper accounting across the Nidec group — a corporate governance failure that stands in stark contrast to peers such as Fast Retailing Co., whose rigorous operational discipline has driven record first-half profits and an upgraded full-year outlook.
The SESC said it plans to review relevant corporate documents and interview company officials, with particular attention to the roles played by Nagamori and other senior executives in directing or condoning the false reporting. Depending on its findings, the commission may refer the case to the Financial Services Agency, which has the authority to impose administrative fines. Nidec’s earnings report for the fiscal year ended March 2026 has been delayed as a result of the ongoing review.
Nidec President Mitsuya Kishida, who took over leadership following Nagamori’s departure from the board in December, has said the company will suspend merger and acquisition activity for the foreseeable future in order to prioritise corporate reconstruction. Kishida has outlined a Â¥130 billion, five-year spending plan to overhaul governance structures and implement controls to prevent future irregularities. The scandal has emerged against a challenging macro backdrop: the Bank of Japan’s anticipated June rate hike is expected to increase borrowing costs, adding financial pressure on companies already dealing with internal restructuring.
The SESC probe adds further regulatory pressure on a company already at risk of delisting from the Tokyo Stock Exchange’s Prime Market, where it has been under heightened scrutiny. Nidec’s difficulties underscore broader concerns among Japanese regulators and institutional investors about governance weaknesses at large conglomerates, and come as authorities step up enforcement efforts to protect the integrity of Japan’s capital markets.
Bank of Japan Expected to Raise Interest Rates at June 16 Meeting