After a long and exhausting probe started by the United States’ Securities and Exchange Commission (SEC), it was resolved that Fiat Chrysler Automobiles NV and its American branch will have to pay the hefty sum of $40 million for their role in misguiding investors about monthly sale numbers.
From 2012 to 2016, Fiat Chrysler US misled investors and buyers while implementing several illegal and frowned upon tactics. Among them, they included non-existent car sales in reports to inflate numbers and advertised a string of consecutive year over year sales increment, one that finalized in 2013.
Prompted by an investigation performed by some law enforcement agencies and federal authorities, such as the US Justice Department, the firm went through the accounting books and revised over five years of the vehicle sales numbers in the United States back in July 2016.
According to a statement provided by the company itself on Friday, it has fully cooperated with the respective authorities and said it had revamped the way it approaches the control over its sale numbers and reporting, including a review on the policies and procedures it implements.
According to the Commission, the automotive company put enormous pressure on its production units to augment sales and keep the so-called year over year streak intact. Because of the pressure, employees of the firm felt the need to report fake sales to increase the number to hit the target artificially.
In fact, it was revealed that dealers received money in exchange for reporting the fake numbers through an internal database. To trick the system, they used cooperative marketing funds, per information provided by the SEC. The mentioned database had fake car sales entries with fake client names, date of deals, and other crucial bits of information.
An Artificially Inflated Database
According to the lawsuit, to report the fake streak of the consecutive year over year growth, the firm implemented a database of the fleet and retail sales, directed to its main American branch.
To disguise the operation and the illicit proceedings, the staffers at the company talked in code, referring to the car sales saved for public disclosure as the bank, the kitty, the bag, and cookie jar.
The Big Three car manufacturing companies in the United States of America (General Motors, Ford, and Fiat Chrysler) have all put a halt to the monthly sales numbers reporting method, migrating to quarterly reports.