Shares of Chinese telecommunications giant ZTE Corporation plummeted on Thursday following a Reuters report that the company may face a financial penalty exceeding $1 billion from the U.S. government. The penalty relates to long-standing allegations of foreign bribery.

Citing two sources familiar with the negotiations, Reuters reported that U.S. authorities are working toward a resolution that would involve ZTE paying a substantial fine. The report noted that the timing of a final agreement remains unclear.

In a subsequent filing to the Hong Kong Stock Exchange, ZTE acknowledged recent media reports concerning an investigation into its compliance with the U.S. Foreign Corrupt Practices Act (FCPA). The company stated, "ZTE is in ongoing communication with the United States Department of Justice regarding the relevant matters and will resolutely defend its rights and interests through legal means and other measures."

When contacted by The Wall Street Journal, a ZTE spokesperson declined to provide further comment beyond the stock exchange filing. The U.S. Department of Justice did not immediately respond to a request for comment.

The news triggered a sharp sell-off in ZTE's stock. Shares closed 12% lower in Hong Kong and were down 10% in Shenzhen. The decline made ZTE one of the leading detractors on the CSI 300 index, which tracks major Chinese A-share companies.