Fiat Chrysler Automobiles (FCA) has agreed to pay $9.5 million to settle allegations from the Securities and Exchange Commission (SEC) that it made “misleading disclosures” regarding an internal audit of emission control systems for diesel vehicles it sold in the United States.
The disclosures by FCA were made in the aftermath of the Dieselgate emissions scandal involving fellow carmaker Volkswagen. In the Dieselgate scandal, VW was found to have used cheating software to circumvent the U.S. testing process and concealed material facts about its cheating from U.S. regulators. In 2017, VW was ordered to pay a $2.8 billion penalty to settle some of these claims; the company recently completed a three-year independent compliance monitorship with the Department of Justice.
Media and analysts began asking other carmakers if they had used similar emissions “defeat devices” on their vehicles. FCA announced via press release and in an annual report in February 2016 that it had conducted an internal audit that concluded the company complied with all U.S. environmental standards regarding emissions.
FCA stated the “audit revealed that all current production vehicle calibrations are compliant with applicable regulations and they appear to operate in the same way on the road as they do in the laboratory under the same operating conditions,” according to the SEC’s enforcement order filed Monday.
The SEC, however, said the audit only focused on whether FCA diesel vehicles sold in the United States contained an emissions defeat device or used any other method to skew emission test results of their vehicles. The audit was not, as FCA inferred, a comprehensive review of the company’s compliance with U.S. emissions regulations, the SEC said. FCA’s press release also did not address issues that federal and state environmental officials had been raising, the SEC said.
“At the time FCA made these statements, engineers at the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) had raised concerns to FCA about the emissions systems in certain of its diesel vehicles,” the SEC said in a press release.
“This case demonstrates the importance of public companies providing accurate and complete information to investors,” stated Joel Levin, regional director of the SEC’s Chicago Regional Office. “At a time of heightened scrutiny of automakers’ regulatory compliance, FCA provided misleading assurances to investors by not disclosing the limitations of its internal audit.”
FCA and several of its subsidiaries would eventually settle the company’s alleged violations of federal and state environmental laws in 2019 by paying a civil penalty of $305 million. The company agreed to pay CARB an additional $19 million and spent another $200 million recalling vehicles that produced emissions in excess of federal and state standards, as well as other mitigation programs, according to the SEC’s order.