Fiat Chrysler Fined $9.5M Over Emission Compliance Audit
Fiat Chrysler Automobiles N.V. FCAU has agreed to pay a fine of $9.5 million in order to settle the U.S. Securities and Exchange Commission’s (SEC) allegations of misleading investors in 2016 by not disclosing that the company conducted only a limited internal review of its compliance with emission regulations.
Though Fiat Chrysler has not admitted or denied the SEC’s findings, management has agreed to pay the penalty.
The penalty paid to SEC agreement is just a small part of the total settlement, which Fiat Chrysler is required to pay under the emissions compliance investigation.
Per SEC, in February 2016, the Italian-American automaker had claimed that an internal audit of the company’s diesel emission control systems in its vehicles had found them to be compliant with the environmental regulations on emissions. The company mentioned this in its annual report as well as in a press release. However, it did not disclose the limited scope of the review.
At the time, the U.S. Environmental Protection Agency (EPA) and California Air Resource Board (CARB) had raised red flags about the company’s emission systems in some diesel vehicles.
In 2019, regulators discovered that the internal audit of Fiat Chrysler’s emission control systems was performed in a limited scope and appropriate disclosures were not made. They revealed that Fiat Chrysler used “defeat devices” to evade emission tests, when the vehicles were on the road driving.
As a result of these findings, in January 2019, Fiat Chrysler agreed to a settlement worth about $800 million to reconcile claims from the CARB that it used illicit software, producing erroneous results on diesel-emission tests.
Per sources, regulators questioned Fiat Chryslers’ diesel vehicle models between 2014 to 2016, which included the 104,000 Jeep Grand Cherokee SUVs and Dodge Ram 1500 Pick-ups.
This is not the first time that an automaker has been charged for non-compliance with emission regulations.
In September 2015, Volkswagen AG VWAGY had admitted to intentionally evading emission rules, and paid more than $35 billion in fines and other settlements for the scandal.
Similar cases have been revealed and settled against other automakers like BMW AG BAMXF and auto supplier Bosch. This has resulted in a tightened scrutiny of automakers’ emission standards.
Over the past few years, Fiat Chrysler has been slammed with penalties and fines on multiple occasions.
Last September, Fiat Chrysler agreed to pay a $40-million penalty to the SEC for misleading investors by inflating monthly sales figure over a five-year period (between 2012 and 2016). The company inflated its new vehicle sales by paying dealers to report fake sales numbers. A month later, Fiat was penalized an $80-million penalty over non-compliance with fuel economy standards and greenhouse gas-emission standards.
Fiat Chrysler currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Stong Buy) stocks here.
Notably, shares of Fiat Chrysler have depreciated 15.8% year to date, underperforming the industry’s fall of 6.2%.
Another top-ranked stock in the auto industry is Suzuki Motor CP SZKMY, sporting a Zack Rank of 1, at present.
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Fiat Chrysler Automobiles N.V. (FCAU) : Free Stock Analysis Report
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