Feds probe Fiat Chrysler over alleged false sales reports

The SEC investigation into Fiat Chrysler’s method of reporting vehicle unit sales to end customers in the USA, comes while the company is under a similar investigation from the Department of Justice, CNBC reports.

The company said it confirmed the probe after media reports about it. Bloomberg News reported the investigation earlier Monday.

An Illinois court is considering a motion by Fiat Chrysler to have the lawsuit dismissed. In December, Fiat Chrysler said it had the best month of USA sales in the company’s 90-year history with 217,527 vehicles sold – recording its 69th consecutive month of year-over-year sales gains.

Fiat Chrysler said in Monday’s statement that annual and quarterly financial statements filed with regulators are based on shipments to dealers, and not on sales to end customers. Spokespeople for the U.S. Justice Department and the SEC declined to comment.

The U.S. Justice Department is conducting a fraud investigation into Fiat Chrysler’s practices, Bloomberg reported.

In January a Fiat Chrysler auto dealers group accused FCA US of financially rewarding dealerships that falsely reported higher vehicle sales, inflating the auto giant’s results.

The dealers that filed the lawsuit – Napleton’s Arlington Heights Chrysler Dodge Jeep Ram in Arlington Heights, Ill., and Napleton’s Northlake Chrysler Dodge Jeep Ram in Lake Park, Fla., – are part of the Napleton Automotive Group, which Automotive News said was the 31st largest dealership group in the U.S.in 2014.

The carmaker said the lawsuit was without merit and pledged to defend itself.

Investors shrugged, as Fiat Chrysler’s stock traded in New York Stock Exchange (FCAU) was still up 0.4% to $6.78 on the day at 1:13 p.m. Similar claims were made in a 2015 lawsuit filed by a dealer of Fiat Chrysler-owned Maseratis.

Fiat Chrysler, in a January 14 regulatory filing, said an internal investigation concluded the padding allegations were baseless and that the lawsuit was “nothing more than the product of two disgruntled dealers”. Federal prosecutors are investigating allegations that Fiat Chrysler violated securities laws by getting dealers to falsely report sales in order to inflate the company¿s numbers. A dealership that hits a sales target can make more profit on each vehicle sold than one that falls short.