Sanyo shares plunged 17 per cent to 190 yen ($1.56) in Tokyo morning trading on the Asahi report.
Noboru Takayama, a spokesman for the Securities and Exchange Surveillance Commission, declined to comment, saying the watchdog does not comment on on-going individual cases.
The investigation is a blow to Sanyo at a time when it has been struggling to turn around its business, trimming thousands of jobs, reducing factory space and dropping some businesses since announcing a restructuring plan in 2004.
It also got a much-needed capital boost a year ago from a group of investors led by Goldman Sachs Group Inc., which became the company's top shareholders and took over the board, putting new management in place.
The Asahi said Sanyo had written off losses of 190 billion yen ($1.6bn) at its subsidiaries, but reported the losses as 50 billion yen ($412m).
Such differences have been corrected over the years, and the company's recent earnings reports are not false, the report said.
Sanyo is forecasting a 50 billion yen ($412m) loss for the fiscal year through March.
Like other Japanese electronics makers, Sanyo has been facing steep competition in recent years by cheaper Asian rivals. Its performance was also hurt by an earthquake near its chip-making plant.