The Football League have charged both Laurence Bassini and Watford with misconduct.
The charge relates to two alleged transactions in 2011 between Watford and finance company LNOC Limited.
The news was broken on Twitter last night by The Watford Observer, @Observer_Owl on Twitter.
@Observer_Owl ‘Football League charge #WatfordFC former owner Laurence Bassini and club with misconduct.’
@Observer_Owl ‘Football League seek order disqualifying former #WatfordFC owner from being director of football club.’
@Observer_Owl ‘Former #WatfordFC owner Laurence Bassini says Football League charges are being defended ‘vigorously`’
The alleged transactions came as two instalments of £500k from the deal which took Danny Graham to Swansea City and a further third transaction of two promissory notes both worth £900k in exchange for £1.66m advance from LNOC.
It is claimed that if the Hornets did not pay the two notes, LNOC would have been entitled to £1.8m from the Football League ‘pool’ account.
The Club contravened Football League rules when it did not inform the League’s governing body within an initial 24 hour period.
As Watford did not seek League approval for the initial transactions in relation to the Graham deal, and failed to receive approval as a result, leading to a charge on two accounts.
Swansea subsequently made a £500k payment to Watford before making their second payment of £500k in February 2012.
However, as of September 2011, it has emerged that the Hornets should have been under a transfer embargo as clubs who agree deals with third parties to receive some or all of their Football League ‘pool’ money are subject to a transfer embargo until an agreement has been stuck and ratified by the Football League.
The Football League are also looking to disqualify Bassini from being a director at a football club for an as yet undetermined period of time.
Neither Watford Football Club nor the Football League have released a statement as yet.
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