Fiat Chrysler Under SEC, FBI Investigation Over Sales Practices

A woman walks past a logo of Fiat Chrysler Automobiles in Turin

Fiat Chrysler said it is cooperating with a Justice Department and Securities and Exchange Commission investigation into sales reporting, with the company previously calling allegations of inflated sales "baseless". Not a lot is known about the investigation which is in its early stages, but people familiar with the matter say it involves possible violations of USA securities laws.

The dealer, Napleton Automotive Group, said the firm encouraged dealers to lie about monthly auto sales and offered the boss of Napleton $20,000 (£15,000) in exchange for falsely reporting the sales of 40 new vehicles.

This year, a dealership group in IL accused FCA US of civil racketeering in a federal civil lawsuit that alleged FCA paid dealers to improperly inflate sales. The group alleges that an FCA executive offered Napleton $20,000 to falsely report sales of 40 new vehicles.

Financial regulators in the U.S. are taking interest in carmakers' practices of recording their revenues based on shipments to their franchised dealers rather than on the sales to end-users.

Officials with Fiat Chrysler and the Justice Department did not immediately respond for comment. But reporting large numbers of sales kept for a dealer's use can paint an overly rosy portrait of the health of a company's US operations, potentially affecting investor sentiment, say critics.

Fiat Chrysler has suggested the lawsuit doesn't make sense, because it "records its revenues based on shipments to dealers and customers" rather than on sales at each dealership, so there wouldn't be an incentive to boost the sales numbers.

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The investigation was originally reported by Bloomberg News. The lawsuit also alleges that the false sales give the appearance that Fiat Chrysler's performance is better than it actually is.

December 2015 reportedly was Fiat Chrysler's best month of US sales, selling more than 217,000 cars over that period.

Sell-side research study experts follow a list of companies, typically from the same industry, producing routine research study reports for the clients of the firm they work for.

Probes into Fiat Chrysler's practices ratchet up scrutiny over how auto makers count sales.

Fiat Chrysler has been on a record 75-month long streak of positive sales growth since Chrysler came out of bankruptcy with the aid of Fiat and the U.S. government. All FCA employees were told not to talk to investigators without a lawyer present. Fiat Chrysler in October increased its reserves by $866 million to cover future warranty and recall costs.

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