Swedish investment bank suspected of "serious accounting fraud".

• Sweden's troubled HQ Bank sold to Carnegie
• HQ Bank accountant KPMG reported after flaws

The Swedish Economic Crime Authority has launched a criminal investigation into suspected accounting crimes and fraud at troubled investment bank HQ Bank, which has been forced into involuntary liquidation and saved in a last-minute rescue bid by its competitor Carnegie.

There are reasons to suspect that the bank has reported incorrect information regarding its trading operations, the authority said in a statement Friday. The bank’s quarterly and annual reports have therefore given a false picture of its position and financial performance.

“Against this background, state prosecutor Berndt Berger today decided to initiate a preliminary investigation on suspicion of serious accounting fraud and suspected scam”, said the authority which is dedicated to combating economic crime.

On Saturday, Sweden's financial watchdog announced it had revoked HQ Bank AB's licence because it had breached Swedish legislation and demonstrated serious deficiencies in its trading operations. The Swedish Financial Supervisory Authority said that the bank “has grossly breached the most central provisions of Swedish legislation” and that “HQ Bank has overvalued its trading portfolio for a long time”.

Swedish investment bank Carnegie Friday said it will buy competitor HQ Bank for 268 million kronor ($37 million). Carnegie spokesman Andreas Koch told AP the investigation would not affect its agreement to buy HQ, which will make Carnegie the Nordic region's leading independent investment bank.

The financial watchdog has also reported HQ Bank's auditor KPMG to the Swedish accountancy regulator after "flaws in the accounting".