The Securities and Exchange Surveillance Commission recommended Tuesday that the Financial Services Agency impose a fine of ¥18 million ($120,000) on general contractor Yamaura for releasing false financial statements.

Hiroyuki Murata, 64, a former accountant at the company listed on the Tokyo Stock Exchange's Prime section, allegedly prepared false financial statements between August 2020 and February 2023 to hide his illegal withdrawal of some ¥2.6 billion from a subsidiary, according to the commission.

Murata is on trial for corporate embezzlement.

"We take seriously the recommendation from the commission and will consider how to respond to a formal notice from the agency," Yamaura, based in Komagane, Nagano Prefecture, said in a statement.

In May 2023, the accounting auditor of the company pointed to a difference of about ¥1 billion between the actual and booked balances of bank deposits by its Tokyo-based subsidiary, Yamaura Kikakukaihatsu.

The parent, in its consolidated earnings report for fiscal 2022 through March 2023, logged ¥1 billion in accounts receivable, which later proved to be a misstatement.

A third-party investigation panel found that Murata, who was in charge of preparing financial statements at Yamaura and accounting at the subsidiary in question, had illegally withdrawn more than ¥2.5 billion by 2023. In response, Yamaura revised financial results for the three years from fiscal 2021.

Murata has been arrested and indicted on suspicion of embezzling about ¥900 million in total together with his 35-year-old son, Toshiki. The money is believed to have been used for credit card payments and loans to the operator of Rizin mixed martial arts events.