West Ham could be fined, docked points or even face expulsion from the Premiership after being hit with a charge of breaching league rules over the transfers of Carlos Tevez and Javier Mascherano last summer.
The Premier League Board has held a lengthy investigation into the acquisition of the Argentina internationals, who were brought to Upton Park under the watch of former chairman Terry Brown.
The Hammers, who have since been taken over by Icelandic businessman Eggert Magnusson, have 14 days to respond to the charges which relate to a breach of rules forbidding the ownership of players by a third party.
Tevez and Mascherano are alleged to have been part-owned by Kia Joorabchian of the Media Sports Investment group.
"It is the Board's complaint that there were agreements in relation to both these transfers that enabled third parties to acquire the ability materially to influence the club's policies and/or the performance of its teams in league matches," confirmed a Premier League statement.
"The Board's view is this constitutes a breach of Rule U.18, which states: "No Club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence its policies or the performance of its teams in league matches or in any of the competitions set out in Rule E.10.
"Furthermore, at the time of the transfer agreements for both Tevez and Mascherano, and until January 24, 2007, West Ham United failed to disclose the third-party agreements to the Premier League and/or deliberately withheld these agreements from the Premier League."
Mascherano has since moved on to Liverpool following a protracted examination of the move by the Premier League Board.
Striker Tevez, who has yet to score for the Hammers, remains at Upton Park and is free to continue playing.