Raytheon Sinks After Disclosing U.S. Probe of Defense Books

Raytheon Technologies Corp. fell after the company disclosed a demand from the U.S. Department of Justice for records dating back more than a decade from the company’s missile business.

The criminal subpoena was dated Oct. 8 and Raytheon is cooperating, according to a company regulatory filing Tuesday. Federal prosecutors are seeking documents and information in a probe of accounting and other reporting matters within Raytheon’s Missiles & Defense business since 2009, according to the filing.

In the same filing, Raytheon also disclosed it had received a second subpoena from the U.S. Securities and Exchange Commission related to a separate, previously disclosed probe. Raytheon tumbled 7.4% to $52.34 at the close of trading in New York amid a broad market rout, the shares’ largest drop since June.

A Raytheon representative said the SEC investigation is unrelated to the Justice Department probe that prompted the Oct. 8 subpoena. In the filing, the Waltham, Massachusetts-based defense contractor said it’s unable to predict the outcome of the inquiries. It said it believes neither will have a material impact on its financial condition or results based on current information.

‘Shoot First’

“The market is in ‘shoot first, ask questions later’ mode,” Citigroup Inc. analyst Jonathan Raviv said in a note to clients. “As a result, we’re not surprised to see the stock reaction since the potential outcomes range from very bad to zero outcome at all. But keep in mind that management-signed documents estimate it’s immaterial.”

Raytheon has previously disclosed the inquiry of the SEC, which is looking into potential improper payments by a joint venture with Thales SA tied to contracts in certain countries in the Middle East since 2014, according to the filing. The DOJ is also investigating the issue, Raytheon said.

“Raytheon Company maintains a rigorous anti-corruption compliance program, is cooperating fully with the SEC’s inquiry, and is examining whether there has been any conduct that is in violation of Raytheon Company policy,” the aerospace and defense giant said in the filing.

The company is the result of the April merger of Raytheon and United Technologies.

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