This week the Dow 30 was rocked with news that Caterpillar (CAT  ) was accused of accounting fraud. This news sent shares lower last week by 4% but this week the news did not go away. The New York Times reported that Caterpillar failed to comply with US tax and financial reporting rules in an effort to keep its stock price high. They didn't make this information up either, they were taking this from a government commissioned report. Once the market got wind of this shares were sent even lower and are now lower by almost 8% since last week.

The accusation here is that Caterpillar avoided reporting billions of dollars that it brought back into the US from divisions of the company in Switzerland. The details of the report showed that Caterpillar brought back an estimated $8 billion in funds that were structured as loans and did not report it. Whoops!

By Thursday of this week the feds were at Caterpillars doors and wanting answers. IRS officials executed a search warrant at the offices of the company in Illinois.

Here's the deal. Large, multinational companies such as Caterpillar are supposed to pay a 35% tax in the US, which is a highly debated topic right now. The key is that it's a debated topic and that the law still says 35%. Although this is astronomical compared to other countries they are still supposed to pay. Our new President Donald Trump has proposed a 10% tax on these companies so that they can bring money back from overseas and put it to work in the states but that is still a discussion and it appears that Caterpillar thought it was ok to bring money back and not report it at all. 

In the long run this will likely continue to hurt shares as more news comes out about the specifics of their actions.