Fiat Chrysler Automobiles has been ordered to pay a $40 million fine by the Securities and Exchange Commission after the OEM allegedly misled investors by inflating sales figures from August 2012 to July 2016, the SEC had found.
FCA, which agreed to pay the fine without admitting or denying liability, fraudulently reported the number of new vehicles that it and its dealers sold each month to customers. On top of that, FCA “falsely touted” that it experienced year-over-year increases in new vehicle sales by reporting, via monthly press releases, a “streak” of uninterrupted sales growth, the SEC claimed, noting the “growth streak” had been broken in September 2013.
To facilitate its false reporting, FCA paid off its dealers to report fake sales, which were later “unwound” or reversed, the SEC noted. In addition, FCA’s US Business Center employees reported fake vehicle sales.
Moreover, the OEM maintained a database of “actual but unreported sales,” which FCA employees referred to as a “cookie jar,” according to the SEC. “In months when [FCA] wanted its vehicle sales results to appear better than they were, [FCA] dipped into the ‘cookie jar’ to inflate vehicle sales numbers,” the SEC filing explained. Specifically, FCA manipulated vehicle sales to avoid ending the growth streak.
The SEC’s charges come almost three months after Santander Consumer USA paid $60 million to FCA to amend a private label financing agreement after SCUSA failed to meet FCA’s penetration rate goals, according to SEC filings. SCUSA’s contract with FCA, which is now in year seven, was signed in 2012 for a 10-year period.
An FCA spokesperson provided AFN with an emailed statement:
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“The U.S. Securities & Exchange Commission announced today that it has reached an agreement with FCA US LLC (FCA US) and Fiat Chrysler Automobiles N.V. (FCA N.V.) concerning the legacy sales reporting matter. FCA US cooperated fully in the process to resolve this matter. The company has reviewed and refined its policies and procedures and is committed to maintaining strong controls regarding its sales reporting. The settlement requires a payment of $40 million, which will not have a material impact on the financial statements of the company.”