LDK Solar Co., a China-basedsolar-wafer manufacturer, said Tuesday that the U.S. Security and Exchange Commission has contacted the company about allegations of discrepancies in its silicon inventory.

The company has seen its share prices plunge dramatically in the last month after its former financial controller, Charley Situ, alleged the company incorrectly reported its inventories of solar-grade silicon.

In recent trading, the stock dropped 6.32 percent to $38.55 per share after experiencing an 8.6-percent bump Monday (see In Brief: LDK Roller Coaster Continues; Shares Up 8.6%). Shares are trading nearly 50 percent below September's peak of $76.75 per share on Sept. 27.

In an announcement Tuesday, LDK said it had correctly stated it had not been contacted by any regulatory agency in a press release Oct. 4.

"Since then, however, LDK has been contacted be the U.S. Securities and Exchange Commission regarding this matter," Tuesday's statement read. "LDK will cooperate fully with the SEC's inquiry."

A spokesman for the SEC wouldn't confirm or deny the investigation.

Also in Tuesday's statement, LDK announced it was starting an independent investigation into the allegations and that it had hired the large, well-known law firm Simpson Thacher & Bartlett to serve as its independent counsel for the investigation.

The company also said it retained another law firm, Latham & Watkins, to defend it against class-action lawsuits.

The announcement about the independent investigation is somewhat befuddling because the company already had announced an independent investigation Oct. 4.

According to the company, Simpson Thacher has retained "a Big Four independent accounting and consulting firm, separate from the company's external auditors," for the review, which seems to indicate the company is conducting a second independent investigation before the first has been completed.

The independent audit first came up Oct. 4, when LDK said an internal investigation found "no material discrepancies" and that an independent auditing firm was conducting a separate assessment of LDK's inventory.

In an invitation-only conference call the same day, LDK Chief Financial Officer Jack Lai said the company invited KPMG International, its usual external auditor, to do a special audit Sept. 26, the same day the company conducted its internal audit.

Lai said he didn't know when the independent report would be ready, but did say the company would make the report available to investors once the audit committee had a chance to review it and compare it with the internal report.

KMPG has conducted an independent audit of LDK's inventory every quarter, Lai said, and hasn't found any material inconsistencies in the past. But he added that third-quarter numbers, gathered Sept. 30, hadn't been tabulated yet, and that they would be out in "three to four weeks."

The third-quarter results could come out with the third-quarter earnings, expected to be released as early as Thursday.

On message boards and emails, some investors have complained about the wait for the independent audit.

After all, in a report Oct. 9, Morgan Stanley said it expected the results to be released in "a week or two." That came after the Associated Press on Oct. 8 reported Lai said LDK would on its silicon inventory "in a matter of days."

But Travis Bradford, president of the Prometheus Institute, a Greentech Media Research partner, said he's not surprised at the length of time the audit is taking.

"I wasn't expecting results this fast, because the accounting firm's having to revisit and create the methodology and do a physical inventory count on what is probably a substantial amount of material, and then they're going to have to go back and tie that to the inventories on the book," he said. "There's a fairly substantial amount of work to do."

Deciding to hire a second auditor could be taken as either an offensive or defensive move, he said.

"Either they believe their own numbers and really want the problem to go away," he said, "or their legal and regulatory situation has deteriorated to the point where they are more or less obligated to have an independent verification."

Either way, it's clear the situation is having serious impacts on LDK's business conduct and ability to raise capital, he said.

"Whether [these allegations] are real or now, it's having an impact on the company and it's a total distraction for the management when they should be focused on meeting their high-growth projections," he said. "Having that many class-action lawsuits and an SEC investigation and two independent audits trying to do inventory counts -- that'll keep you busy."

Combined with China Sunergy's class-action lawsuit troubles, also over the company's silicon supplies, Bradford said the question is whether the industry is seeing a trend of investors aligning against Chinese solar companies.

Bradford said he thinks the ability of Chinese companies to raise money in initial public offerings might be diminished by the perception that China-based companies are risky right now, regardless of whether the claims end up having any merit or not.

"My guess is it's going to be very hard for new Chinese IPOs to raise money," he said, adding the situation could potentially have a cooling affect on the overall industry's ability to raise capital.

While there's no evidence yet, he said, it's also too early to tell.