On September 28, the U.S. Securities and Exchange Commission (SEC) announced settled charges against Fiat Chrysler Automobiles N.V., a London-based public company that sells vehicles through its Michigan-based subsidiary. The SEC charged Fiat with making misleading disclosures about an internal audit of its emissions control systems. As part of the settlement, Fiat is to pay a $9.5 million civil penalty. Qualified individuals may now submit whistleblower award claims for the case.
According to the SEC, in February 2016, Fiat made misleading statements in both a press release and an annual report about an internal audit of its emissions control system. The SEC alleges that Fiat falsely represented that its audit confirmed its vehicles complied with environmental regulations concerning emissions. These statements allegedly failed to sufficiently disclose the actual limited scope of the audit, which focused only on finding a specific type of defeat device. According to the SEC, “at the time Fiat made these statements, engineers at the U.S. Environmental Protection Agency (EPA) and California Air Resource Board (CARB) had raised concerns to Fiat about the emissions systems in certain of its diesel vehicles.”
“This case demonstrates the importance of public companies providing accurate and complete information to investors,” said Joel R. Levin, Regional Director of the SEC’s Chicago Regional Office. “At a time of heightened scrutiny of automakers’ regulatory compliance, Fiat provided misleading assurances to investors by not disclosing the limitations of its internal audit.”
In settling the charges, Fiat neither admitted nor denied the SEC’s findings. Fiat agreed to pay a $9.5 million civil penalty and to cease and desist from committing future violations of the reporting provisions of the federal securities laws.
On October 30, the SEC posted a Notice of Covered Action (NCA) for the case. This notice signals that the SEC is now accepting whistleblower award applications for the case. Individuals who voluntarily provided the SEC with original information that led to this successful enforcement action are entitled to file for a monetary award of 10-30% of the funds the government recouped.
The 2020 fiscal year was a record-setting year for the SEC Whistleblower Program. The SEC issued whistleblower awards totaling approximately $175 million to 39 individuals. However, the SEC is currently on pace to break the $175 million record within the first two months of this fiscal year. Since the 2021 fiscal year began on October 1, the SEC has issued approximately $154 million to six whistleblowers.