US federal prosecutors have launched a criminal investigation into US telecom company Qwest, sending its shares diving as much as 41 per cent.
Qwest is already under investigation for its accounting practices.
The fourth largest US local phone company said the US attorney's office in Denver notified it of the investigation on Tuesday but did not explain its scope.
Qwest has been under pressure for months as it struggles to cope with a cash crunch under a debt pile of $26 billion. Credit rating agencies have cut the company's debt to "junk" status, and the US Securities and Exchange Commission is probing its accounting practices. Qwest's announcement put a further dent in the telecommunications sector's credibility after WorldCom's $3.85 billion accounting scandal surfaced in late June.
Qwest's shares plunged almost 60 percent the day after WorldCom said it had uncovered improper accounting, as investors worried that Qwest would suffer a similar scandal.
Qwest said at the time that it was a different company and was cooperating with the SEC investigation.
Qwest's shares fell as low as $1.53, a drop of 41 per cent, on the New York Stock Exchange yesterday before finishing down 83 cents, or 32 per cent, at $1.77.
The stock has plunged 97 per cent from its all-time high of almost $67 a share in June 2000.