Car sales
Sales are an important part of any business but it's especially important in the car business, which is why this story of the Department of Justice and Securities and Exchange Commission investigating Fiat Chrysler's sales is so fascinating. Car sales are a huge part of the American economy and it is a high pressure industry. Related: I cannot recommend This American Life's "129 Cars" enough.
Anyway, US car sales have been good lately, setting a record in 2015 and this year looks pretty good too; Fiat reported their best June sales in 11 years and their best month ever last December. But since the DOJ and SEC are asking questions, so that sorta ruins the fun:
Fiat Chrysler is cooperating with investigations by the Justice Department and the Securities and Exchange Commission into the reporting of vehicle sales to customers in the U.S., the company said in a statement Monday.
Bloomberg News reported earlier that prosecutors had opened a criminal investigation of the company for potential securities fraud, according to people familiar with the matter. The Justice Department inquiry is in an early stage, according to two people, who asked not to be identified because the investigation is confidential.
The federal investigation follows civil lawsuits that challenged the company’s sales numbers. In a suit filed in January, two Chicago-area dealerships that operate under the Napleton brand name alleged that the company inflated its U.S. car sales by paying dealers to report selling more vehicles than they actually did.
The Napleton dealerships suing Fiat Chrysler claim that "sales were padded through a scheme by which dealers — sometimes unbeknown to their owners — were paid to create false New Vehicle Delivery Reports." In one case, a Fiat Chrysler manager asked a dealership owner to "falsely report 40 vehicles as sold in exchange for a $20,000 payment" and it would be credited as "cooperative advertising support." Fiat says the claims are baseless.
PwC
Last November we mentioned that Burrill & Co. sued PwC for overlooking some allegedly illegal advanced management fees. Now Francine McKenna reports that the SEC is looking into the matter:
The most recent amended filing in the fund’s lawsuit against the executives and PwC, filed in California Superior Court in San Francisco in April after the SEC’s civil actions against the executives, says that whistleblowers’ allegations “sparked ongoing criminal and civil investigations by federal authorities.”
The SEC’s settlement in March with the executives said that its investigation was ongoing and the auditor is, based on the allegations outlined by the fund last December, the most likely remaining target of its inquiry.
For a fun twist, the lawsuit also claims that there are some potential independence issues:
PwC’s Israel member firm signed a contract with Burrill’s firm in 2002 to jointly identify and invest in biotech start-ups. PwC-Israel’s CEO described his firm and Burrill as “partners” in an “alliance agreement that will uniquely accelerate global partnering with biotech companies in Israel.”
PwC partners and executives from Burrill’s organization also spoke at each other’s conferences and organized other conferences together, according to the lawsuit.
Okay, it's not as fun as the L.A. Department of Water and Power situation, but it'll do.
Previously, on Going Concern…
Chris Hooper wrote about some atrocious Big 4 anthems. And in Open Items, someone's asking for scheduling software recommendations.
In other news:
- Will Planned Derivatives Accounting Changes Stem Flow of Restatements, Improve Risk Management?
- "If a store showed a significant drop in employees picking an emoji, regardless of which one, we found that store had a big attrition problem 30 to 60 days later […] It was remarkably accurate.”
- Man Quits Job To Become Full-Time ‘Pokemon Go’ Player
- Square watermelon.
- 1 gun, no roses.
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