A replacement GM ignition switch. The maker has notified 1.4 million owners to start scheduling repairs.
The U.S. Securities and Exchange Commission is the latest government agency to be probing the way General Motors handled the recall of 2.6 million vehicles due to an ignition switch defect linked to the deaths of at least 13 people.
The SEC probe came to light through the automaker’s quarterly SEC filing accompanying its annual earnings report. Neither GM nor the SEC would subsequently comment on the investigation.
The SEC investigation comes on top of separate probes by the U.S. Justice Department, the National Highway Traffic Safety Administration, and committees of both houses of Congress. General Motors is conducting its own internal probe, meanwhile, spearheaded by the former U.S. Attorney who oversaw the government’s scrutiny of the collapse of financial firm Lehman Brothers.
(Barra defends GM’s handling of recall investigation. Click Here for the latest.)
Referring to that internal probe, GM said “We are investigating these matters internally and believe we are cooperating fully with all requests, notwithstanding NHTSA’s recent fines for failure to respond.” The automotive safety agency announcing it would be fining GM for failing to provide requested documents quickly enough.
In its SEC filing on Thursday, GM noted the various government “investigations could result in the imposition of damages, fines or civil and criminal penalties.”
While it’s unclear precisely where the new SEC probe could lead, potentially the most damaging investigation now underway is taking place at the Justice Department – which could lead to civil or criminal charges, or both. The agency only last month wrapped up a seemingly similar case focused on how Toyota mishandled a series of recalls in 2009 and 2010 related to so-called sudden acceleration.
The settlement of that matter resulted in a $1.2 billion fine and three years of probation – while also requiring significant changes in the Japanese maker’s handling of safety-related problems.
Many observers believe that case will serve as a model for an eventual settlement by GM. The Detroit maker has already adopted a number of steps taken by Toyota, including the appointment of a global safety czar. GM also has put two senior engineers apparently linked to the decade-long delay of the ignition switch recall on paid leave. And it has seen a number of senior managers, most recently its global engineering chief, leave in recent weeks.
Along with the various probes, GM’s SEC disclosure noted that the company is facing at least 55 lawsuits, including a shareholder suit alleging securities fraud related to the handling of the ignition switch recall. It is unclear whether the SEC probe is related to or stems out of that particular lawsuit.
On Thursday morning, GM announced an 85.5% decline in year-over-year earnings for the first quarter of 2014, a modest $125 million. That decline reflects a variety of factors, including the $1.3 billion GM wrote down during the January to March quarter for various recalls. All told, GM recalled about 7 million vehicles during the period for numerous problems, roughly a third as many vehicles as the entire auto industry recalled during all of 2013.
(For the full story on GM’s Q1 earnings, Click Here.)
But the maker did get one bit of good news, CEO Mary Barra being named to the Time 100, a list of the 100 most influential people in the world.
(For more on Barra and the Time 100, Click Here.)