SEC Enforcement: Fiat-Chrysler Tagged for Misleading Emissions Disclosure
Earlier this week, the SEC announced settled enforcement proceedings against Fiat-Chrysler arising out of allegedly misleading disclosures about its compliance with emissions standards. Here’s an excerpt from the SEC’s press release:
The SEC’s order found that in February 2016, FCA represented in both a press release and an annual report that it conducted an internal audit which confirmed that FCA’s vehicles complied with environmental regulations concerning emissions. As found in the order, FCA’s statements did not sufficiently disclose the limited scope of its internal audit, which focused only on finding a specific type of defeat device, or that the audit was not a comprehensive review of FCA’s compliance with U.S. emissions regulations. In addition, at the time FCA made these statements, engineers at the U.S. Environmental Protection Agency (EPA) and California Air Resource Board (CARB) had raised concerns to FCA about the emissions systems in certain of its diesel vehicles.
Under the terms of the SEC’s order, Fiat-Chrysler consented to a cease & desist order enjoining it from committing or causing future violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-16 thereunder. The company also agreed to a $9.5 million civil monetary penalty.
The announcement of this proceeding follows on the heels of a significant setback in the SEC’s enforcement action against Volkswagen arising out of that company’s use of a “defeat device” to thwart emissions tests. As discussed in a Mintz memo, a California federal court recently dismissed a significant portion of the SEC’s securities claims against Volkswagen on the grounds that they were previously released by the DOJ.
I’m inclined to be a little more forgiving toward Fiat-Chrysler than I am toward Volkswagen. Sure, this conduct seems to be less egregious, but the real reason is that I have a sentimental attachment to the company. My first car was a 1972 Dodge Polara, and my current dream car is an Alpha-Romeo Stelvio Quadrifoglio – both of which are currently under the Fiat-Chrysler corporate umbrella. Of course, in the real world I still drive a 2012 Equinox that eats oil and has a broken tail light that I busted when I accidentally hit it with a garbage can I was dragging in from the curb a few months ago.
By the way, if it seems like there are more high-profile enforcement actions this week than usual, don’t forget that the SEC’s fiscal year ends today, so Enforcement needs to put cases to bed now if they’re going to count in this year’s stats.
-John Jenkins, TheCorporateCounsel.net September 30, 2020
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