Fiat Chrysler is playing $40 million as part of a settlement with the Securities and Exchange Commission about falsifying sales reports.
The Securities and Exchange Commission will collect a $40 million settlement from Fiat Chrysler Automobiles NV and its U.S. unit after the agency determined the automaker falsified its monthly sales reports for the better part of five years.
From 2012 through 2016, Fiat Chrysler’s U.S. unit falsely reported its new vehicle sales results each month, bulking up the results through a variety of fraudulent methods to make it look like the company had a 75-month streak of year-over-year monthly sales increases.
The company’s run of increased sales ended in 2013; however, it continued to maintain it was on the impressive sales run until 2016. In July 2016, it revised five years of monthly sales reports. The move was done to reflect a new reporting method.
(Fiat Chrysler Facing Potential Legal Battle About Sales Reporting)
During that time, the SEC, U.S. Justice Department and other federal authorities were already investigating the possibility the automaker had fraudulently kept the streak alive.
The investigation found that FCA pressured parts of the company’s business “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,” Reuters reported.
Specifically, the company paid dealers to report non-existent sales to made-up customers and transactions that never happened. FCA disguised the payments to the dealers, calling them “cooperative marketing funds.”
Reid Bigland, FCA head of U.S. Sales, put a stop to the practices behind falsifying the monthly sales results.
(Feds probing fraud at Fiat Chrysler)
According to Reuters, the company used a database of fleet and certain other retail 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.”
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.
(FCA denies pressuring dealers to inflate sales results)
Fiat Chrysler no longer reports its sales on a monthly basis. General Motors and Ford also follow the same practice.