The investigation relates to revenue recognition with respect to certain deals in the United States, Britain and Ireland, IBM said on Tuesday.
The company said it learned of the investigation in August and was cooperating with the SEC, but did not disclose what deals were being probed.
"IBM has a rigorous and disciplined process for the preparation of its financial statements and the reporting of revenue," an IBM spokesman told Reuters.
IBM has been a subject of several SEC probes in the past, including an investigation in 2013 on how it reported revenue from cloud computing business. The regulators later decided not to recommend any action following the investigation.
Shares of the world's largest technology services company fell as much as 4.4 per cent to a five-year low of $137.33.
IBM posted a bigger-than-expected drop in third-quarter revenue and cut its full-year profit forecast last week as a stronger U.S. dollar accentuated weakness in demand from China and emerging markets.
Separately, IBM also authorized a $4 billion share buyback on Tuesday, in addition to $2.4 billion remaining from a previous share repurchase program announced in October last year.
Up to Monday's close, IBM's stock had dropped about 10.5 per cent this year.
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