FILE PHOTO: The Nissan logo is seen at the North American International Auto Show in Detroit, Michigan, U.S., January 14, 2019. REUTERS/Jonathan Ernst

TOKYO (Reuters) - Japan’s markets watchdog will likely recommend that the financial regulator fine Nissan Motor Co up to 4 billion yen ($37 million) over the alleged underreporting of former Chairman Carlos Ghosn’s compensation, a source said.

The Securities and Exchange Surveillance Commission (SESC) will likely recommend the fine on the basis that Ghosn’s alleged underreported salary had a “significant” impact on investor decisions regarding the company, the source said, declining to be identified.

A spokesman for the SESC declined to comment on specific cases, while Nissan was not immediately available for comment.

The SESC is expected to formally start its investigation before the end of the month, when it examines Nissan’s latest annual filings, the source said.

If Nissan files documentation to the SESC before the formal investigation begins and recognizes that previous reporting was incorrect, it may receive a reduced fine of around 2.4 billion yen, the source said.

Ghosn was arrested in Tokyo in November over allegations of financial misconduct, including understating his salary by around 9.1 billion yen ($84.71 million) over a period of nearly a decade and temporarily transferring personal financial losses to the books of Nissan, Japan’s No. 2 automaker.

Since then, he has also been accused of enriching himself by around $5 million at Nissan’s expense.

Ghosn, who has been released from detention pending his trail, denies all of the charges.

The fine, which was earlier reported by domestic media, would cover a four-year period through March 2018, the source said. Due to the statute of limitations, Nissan is not liable for any underreporting before that period.