Washington D.C., USA (October 1, 2019) – Fiat Chrysler Automobiles and its daughter company FCA US agreed to pay US$40 million as a civil penalty to settle charges with the U.S. securities regulator. The Automaker is alleged of misleading investors by inflating sales numbers from 2012 to 2016. The regulator explains in a press release on September 27 that the automaker did not admit or deny the agency’s allegations.
The U.S. Securities and Exchange Commission (SEC) charged the automaker Fiat Chrysler and its daughter company FCA US for misleading investors by overstating its monthly sales numbers between 2012 and 2016. On September 27, the SEC announced in a press release that the Italian-American companies have agreed to pay a civil penalty over US$40 million to settle the charges.
Simultaneously, Fiat Chrysler did neither admit, nor deny the agency’s allegations with the settlement. However, the companies obliged to stop violating anti-fraud, reporting and internal accounting control regulations according to the SEC.
Over a five-year period, it is alleged that the number of new vehicles sold each month to customers in the United States was inflated. The automaker was advertising in press releases with a ‘streak’ of uninterrupted monthly sales growth, when in fact, the sales were declining already in September 2013 as stated in the SEC’s press release. The agency explains that ‘new vehicle sales and the growth streak were key performance indicators that illustrated the company’s competitive position and demand for its vehicles.’
The overstating vehicle sales figures were produced by paying dealers to report fake numbers. Moreover, a database of actual but unreported sales was maintained. When the growth streak has been in danger of ending, the company used the pool of unreported sales to manipulate the monthly numbers in order to accomplish their targets. The SEC reports that employees referred to this database of unreported sales as the ‘cookie jar’.
‘New vehicle sales figures provide investors insight into the demand for an automaker’s products, a key factor in assessing the company’s performance,’ said Antonia Chion, Associate Director in the SEC’s Division of Enforcement. ‘This case underscores the need for companies to truthfully disclose their key performance indicators.’
