Fiat Chrysler Automobiles NV and its U.S. unit is set to pay $40 million for misleading investors regarding its monthly sales figures and will resolve a lengthy probe by the U.S. Securities and Exchange Commission (SEC).
During a five-year period from 2012 through 2016, Fiat Chrysler’s U.S. unit used a series of misleading moves to falsely report new vehicle purchases and falsely tout a “streak” of uninterrupted monthly year-over-year sales growth, when it had really ended in September 2013.
In July 2016, the company revised over five years of monthly U.S. vehicle sales figures to represent a new reporting method, amid an investigation by federal authorities consisting of the U.S. Justice Department.
Fiat Chrysler stated Friday it “cooperated fully” and added it has “reviewed and refined its policies and procedures and is dedicated to maintaining strong controls concerning 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 misleading sales figures in a company database using “cooperative marketing funds” to disguise the payments, the SEC stated, suggesting the database “contained false vehicle sales entries, including false customer names and dates of sales.”
The suit stated the company used a database of fleet and particular other retail sales, at the direction of its head of U.S. sales, to mislead vehicle sales results and year-over-year growth percentages on monthly basis.
Workers referred to the vehicle sales saved for public reporting, the SEC stated, with terms such as “cookie jar,” the “bank,” the “bag,” and the “kitty.”
Detroit’s Big Three automakers are no longer reporting reporting monthly sales figures, instead they report on a quarterly basis.