By Luciana Magalhaes And Paul Kiernan 

SÃO PAULO--A corruption investigation involving Brazilian state-controlled energy firm Petroleo Brasileiro SA is now being viewed as a liability to investors, who just a few months ago snapped up some of the company's shares in the wake of the scandal.

Petrobras confirmed this week it is being investigated by the U.S. Securities and Exchange Commission in relation to Brazilian prosecutors' allegations that it was at the heart of a vast money-laundering and kickback scheme. The share price has dropped more than 40% since hitting an 18-month high in early September, and the company delayed its third-quarter earnings report because of auditors' doubts.

"No one knows how big the hole is (in the company's numbers)," said Carlos Gribel, head of fixed income at Andbank Brokerage in Miami. "A lot of people think that worse things could start to come out."

According to prosecutors and suspects arrested in the case, a group of major construction firms in Brazil colluded to overcharge Petrobras for tendered contracts, allegedly paying bribes to local politicians and Petrobras executives along the way.

The case has dominated news reports in Brazil for months, but it wasn't always seen as a clear negative for Petrobras. After Federal Police announced the arrest of a former Petrobras executive on March 20, the firm's preferred shares shot up 24% over the next two weeks on hopes that a corruption scandal at the state-owned company would hurt left-leaning President Dilma Rousseff's re-election chances.

"There is a good amount of concern from clients," said Alejo Czerwonko, an emerging markets economist at UBS Wealth Management, which oversees $1 trillion in assets. "Growth has been disappointing for an economy of the importance of Brazil and the corruption allegations don't help," said Mr. Czerwonko, who declined to comment specifically about Petrobras, but said clients have been calling with questions about what is going on in Brazil.

With political uncertainty subsiding, investors are now trying to understand what the investigation means for the company. Ms. Rousseff won the election last month, while another major source of doubt will likely be resolved this week with the expected nomination to head the Finance Ministry.

Petrobras' shares reached 24.56 reais in early September, when opinion polls were showing Ms. Rousseff behind in the presidential race. But the price has plunged since then as Ms. Rousseff regained the lead in polls as more details of the alleged corruption emerged. Petrobras' shares closed at 14.10 reais on Wednesday.

The company has said it is the victim of the alleged corruption scheme. But Petrobras could still face costs that go beyond the millions of dollars in legal fees that the company has already started paying.

Morgan Stanley analyst Bruno Montanari said in a report last week that the most immediate outcome of the probe is likely to be a "sizable asset write-off and lower dividends for voting shares." The amount of the write-down will likely range from 5 billion Brazilian reais ($2 billion) in a best-case scenario to 21 billion in the worst case.

Earlier this month, the company delayed the release of its third-quarter earnings because auditors were uncomfortable signing off on the numbers until the extent of the alleged corruption was known.

Mr. Montanari said a "material delay" in the release of Petrobras' audited 2014 results could give some holders of Petrobras' bonds the right to demand immediate payment.

"In that case, we believe one of the solutions could be a new equity issuance, which could be very dilutive," Mr. Montanari said.

Petrobras executives said at a news conference this month that the company has enough cash on hand to fund its operations and investments for at least six months.

The corruption investigation has come at a bad time for Brazil. The country's economy fell into recession in the first half of the year, while inflation remains above official targets. Ratings firms have sounded alarms saying that Brazil could lose its investment grade if the government fails to improve its fiscal situation.

Andbank's Mr. Gribel said the indefinite delay of Petrobras' earnings release sparked a wave of selling of the company's bonds.

"There is a lot of disappointment related to Brazil right now," Mr. Gribel said. "First, with the re-election of President Dilma and now with Petrobras."

Write to Luciana Magalhaes at Luciana.Magalhaes@dowjones.com and Paul Kiernan at paul.kiernan@wsj.com

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