Fiat Chrysler Automobiles NV and its U.S. unit will pay $40 million for misleading investors about its monthly sales figures and will resolv...
Fiat Chrysler Automobiles NV and its U.S. unit will pay $40 million for misleading investors about its monthly sales figures and will resolve a lengthy probe by the U.S. Securities and Exchange Commission (SEC).
Over a five-year period from 2012 through 2016, Fiat Chrysler's U.S. unit used a series of fraudulent moves to falsely report new vehicle sales and falsely tout a "streak" of uninterrupted monthly year-over-year sales growth, when it had actually ended in September 2013.
In July 2016, the company revised more than five years of monthly U.S. vehicle sales figures to reflect a new reporting method, amid an investigation by federal authorities including the U.S. Justice Department.
Fiat Chrysler said Friday it "cooperated fully" and added it has "reviewed and refined its policies and procedures and is committed to maintaining strong controls regarding its sales reporting." The SEC settlement is not material to its financial results, it added.
The SEC said Fiat Chrysler put pressure on its business centers "to increase sales, maintain the year-over-year sales streak, and hit internal sales targets, particularly on the last sales day of the month" and as a result some employees at most of the Business Centers "engaged in fake sales reporting."
Dealers were paid to report fake sales in a company database using "cooperative marketing funds" to disguise the payments, the SEC said, adding the database "contained false vehicle sales entries, including false customer names and dates of sales."
The suit said the company used a database of fleet and certain other retail sales, at the direction of its head of U.S. sales, "to misreport vehicle sales results and year-over-year growth percentages every month."
Employees referred to the vehicle sales saved for public reporting, the SEC said, with terms like "cookie jar," the "bank," the "bag," and the "kitty."
Detroit's Big Three automakers have ended the practice of reporting monthly sales figures and now report on a quarterly basis.
In April, Fiat Chrysler settled lawsuits with seven of its dealers over claims it urged them to input phony sales to help it meet sales targets for an undisclosed sum, while in May it settled a lawsuit with stockholders for $14.75 million.
The Justice Department declined to comment on the status of its investigation.
In May, Fiat Chrysler Automobiles' U.S. sales chief Reid Bigland sued the company claiming it withheld 90% of his 2018 compensation because he cooperated with the SEC probe. An Oct. 3 hearing is set in the suit.
Bigland said in his lawsuit that the company's sales reporting methodology had been in place since the late 1980s and was widely known throughout the company including by Sergio Marchionne, who was chief executive until his death in July 2018, and other senior executives.
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