Xinyu, China-based LDK Solar [1] (NYSE: LDK [2]) said today that the U.S. Securities and Exchange Commission is looking into allegations that the company incorrectly reported its polysilicon inventories.

The claims first came to light earlier this month when LDK announced that it had fired Charley Situ, its former financial controller (see Mishaps and murmurs [3]).

Situ reportedly sent emails to the SEC about the allegations.

LDK conducted an internal probe that it said found no material discrepancies in its financial statements.

Today, the company launched an independent investigation headed up by the two outside directors on its Audit Committee, Louis Hsieh and Bing Xiang.

"The Audit Committee intends to analyze Mr. Situ's allegations as thoroughly and in as much detail as necessary. We have retained some of the premier professionals in the world to assist us in this endeavor," said Hsieh.

Simpson Thacher & Bartlett is serving as independent counsel for the investigation. LDK said that Simpson Thacher retained one of the Big Four accounting firms for this review.

The solar wafer maker said, "Management stands by its prior statements and believes that the Audit Committee's ongoing independent investigation will confirm its conclusions."

The company has continued to make deals while battling the allegations, including a $533 million, three year multicrystalline supply agreement with China's Canadian Solar (see LDK in $533M supply deal with Canadian Solar [4]).

LDK is also taking on outside counsel, Latham & Watkins, to defend itself and some of its directors and officers against lawsuits filed in the U.S.

One of the lawsuits, put forward by Milberg Weiss, alleges that LDK had significantly less feedstock inventory than it claimed to have and that only a fraction of the feedstock inventory that the company did have was of sufficient quality for use in the manufacture of silicon wafers.

LDK said it "believes that these claims lack merit and intends to vigorously defend the cases."

The company said it plans to cooperate fully with the SEC's inquiry.