Fiat Chrysler pays $40 million fine for lying about sales numbers
Fiat Chrysler agreed to a $40 million fine to settle charges that it lied to investors for years about how many cars it was selling.
The cooking of sales figures took place between 2012 and 2016 with the help of a database of unreported sales known internally as the “cookie jar,” according to a statement Friday from the Securities and Exchange Commission.
The automaker did not admit to or deny any wrongdoing as part of the settlement. But the SEC says Fiat Chrysler falsely claimed that it had a prolonged period of sales growth when the streak of sales gains it was bragging about each month was a myth.
“The SEC’s order finds that [Fiat Chrysler] inflated new vehicle sales results by paying dealers to report fake vehicle sales,” said the agency. It said that automaker also maintained a database of actual sales that it did not publicly report.
“In months when the growth streak would have ended or when [Fiat Chrysler] fell short of other targets, [Fiat Chrysler] dipped into the ‘cookie jar’ and reported old sales as if they had just occurred.”
The settlement order filed by the SEC said that Fiat Chrysler used 7,000 sales from the cookie jar in September 2013, near the beginning of the streak of improved monthly sales, and 12,000 sales in the May 2016 report, near the end of the streak.
Fiat Chrysler eventually claimed that improved year-over-year sales reached 75 months, or just over six years, by the summer of 2016. It boasted it was “not an inconsequential feat” and “a symbol of our continuing success in the marketplace,” according to the SEC order in the case.
The agency cited media reports in which the streak was described as “a stunning record,” “jaw-dropping,” and “incredible.”
The company had only a limited comment on the settlement, stating it “has reviewed and refined its policies and procedures and is committed to maintaining strong controls regarding its sales reporting.”
The suspect nature of the sales report first became public in early 2016, when two Chrysler dealers filed a federal lawsuit against Fiat Chrysler accusing it of asking dealers to falsely report sales of dozens of vehicles on the last day of the month, and then to “back-out,” or undo the sales on the first day of the next month.
At the time, Fiat Chrysler denied any wrongdoing, and said the suit had been filed because the dealers were failing to meet their sales obligations. But by that summer Fiat Chrysler was confirming that it was under federal investigation for its sales reporting practices.
The lawsuit was settled earlier this year on terms that were not publicly disclosed.
Shares of Fiat Chrysler fell slightly in trading Friday after the fine was announced.
— CNN Business’ Peter Valdes-Dapena contributed to this report