On September 24, the U.S. Securities and Exchange Commission (SEC) announced settled charges against German auto-manufacturer BMW and two of its U.S. subsidiaries. The SEC charged BMW with disclosing inaccurate and misleading information about retail sales volume in the U.S. BMW is to pay a civil penalty of $18 million. On October 30, the SEC posted a Notice of Covered Action for the case, signaling that qualified individuals should now apply for a whistleblower award for the case.
According to the SEC, BMW inflated its reported retail sales in the U.S. from 2015 to 2019. By doing so, BMW was allegedly able to reach internal sales targets and publicly maintain a leading retail sales position compared to other premium automotive companies. During this period, BMW raised approximately $18 billion from investors in corporate bonds offerings. According to the SEC, BMW’s inflation of reported sales meant that the information provided to investors during this period contained material misstatements and omissions.
“Companies accessing U.S. markets to raise capital have an obligation to provide accurate information to investors,” said Stephanie Avakian, Director of the SEC’s Division of Enforcement. “Through its repeated disclosure failures, BMW misled investors about its U.S. retail sales performance and customer demand for BMW vehicles in the U.S. market while raising capital in the U.S.”
BMW and its U.S. subsidies neither admitted nor denied the SEC allegations in accepting the settlement. They agreed to pay a joint penalty of $18 million and to cease and desist from future violations of the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933. The SEC notes that BMW provided significant cooperation with the investigation in the midst of the COVID-19 pandemic. Their cooperation was taken into account when the SEC imposed the penalty.
“This settlement illustrates the significant benefits to companies for providing concrete cooperation that substantially advances the quality and efficiency of our investigations once contacted by agency staff,” said Anita B. Bandy, an Associate Director in the Division of Enforcement. “As we continue to vigorously pursue wrongdoing during the COVID-19 pandemic, companies wishing to receive credit should be forthcoming in their approach to cooperation.”
On October 30, the SEC posted a Notice of Covered Action in reference to this case. The Notice of Covered Action signals that individuals who voluntarily provided the SEC with original information regarding this case should now submit a whistleblower award claim. Qualified SEC whistleblowers are entitled to a monetary award of 10-30% of all funds recouped by the SEC in the relevant enforcement actions. In this case a whistleblower award would range from $1.8 million to $5.4 million.
Since issuing its first award in 2012, the SEC has awarded approximately $719 million to 112 individuals. In October, the SEC issued a $114 million whistleblower award – by far the largest in program history. In addition to awards, the SEC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality.
SEC Charges BMW for Disclosing Inaccurate and Misleading Retail Sales Information to Bond Investors
Notices of Covered Actions