Watford are under investigation from the English Football League following allegations that they supplied false financial documents during their 2014 takeover.
According to a report by Daily Telegraph’s on Monday, it is claimed the club forged a banking letter during Gino Pozzo's takeover of the Hornets, where he assumed complete control of the club from his father Giampaolo.
The EFL have launched a full investigation, as the Hornets were a Championship club at the time, and they could hand down a hefty fine or even a points deduction should the allegations be found true.
In a statement by an EFL spokesman: "We can confirm, following receipt of information from the Daily Telegraph, that we immediately commenced a disciplinary investigation into serious allegations made against Watford Football Club.
"The club has been formally contacted by the EFL and is now required to provide a full and detailed response to the allegations.
"Once that response is received, it will be fully considered by the EFL and appropriate action will be taken under our rules and regulations.
"We will not be making any further comment until we are in receipt of the club's response."
And in a released statement by Watford to the Telegraph: "There are two ongoing investigations. It would be inappropriate to comment further until those investigations reach completion."
The Hornets are currently ninth in the Premier League after taking 12 points from their opening nine games.