Sims Metal Management Ltd. (SGM), the world’s largest scrap metal recycler, tumbled the most in more than five months after an internal investigation revealed potential fraud at two of its U.K. businesses.
The stock fell as much as 6.6 percent to A$9.32 in Sydney trading, its biggest drop since Aug. 15. It declined 4.6 percent to A$9.52 at 12:42 p.m. The benchmark index was little changed.
The carrying value of inventory at its units at Long Marston and Newport may be overstated by about A$60 million ($63 million), New York-based Sims said today in a statement. The company said it has set up a special investigation committee, which will work with external auditor PricewaterhouseCoopers LLP and legal counsel Baker & McKenzie LLP.
“The preliminary findings indicate the situation has arisen in the context of control failures and potential fraudulent conduct by local and regional plant management responsible for technology and downstream processing systems in the U.K.,” Sims said in the statement.
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