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Shares of

Citizens Communications


tumbled after the company said it was being investigated by the

Securities and Exchange Commission

for potential irregularities surrounding $7.8 million in payments it made.

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The shares were recently down $1.27, or 11.8%, to $9.66.

Citizens said Monday night that it is under an informal investigation by the SEC. Morgan Stanley subsequently downgraded the stock to underweight from equal-weight.

The company disclosed its own investigation into the payments in an SEC filing earlier this month. With the help of forensic accountants, Citizens said it was looking into possible payments made by its public utilities division for services the company didn't receive. In the company's 2002 financial statements, these payments were reflected as charges to earnings.

Two former Citizens officers -- Ken Cohen, president and chief operating officer of the public services sector, and Livingston Ross, vice president of reporting and audit -- have been terminated.

Separately, Citizens said it will cut 8% of its telecommunications staff by the end of 2002. The cuts are expected to save the company $25 million to $30 million annually.

Stamford, Conn.-based Citizens is a telecommunications service provider.