Suit accuses Fiat Chrysler, CEO of securities fraud
Washington — A federal judge in New York will decide soon which shareholder to appoint in a class-action securities fraud suit lodged against Fiat Chrysler Automobiles NV, its CEO Sergio Marchionne and chief financial officer Richard Palmer.
The suit was filed against the company in September after the automaker agreed to a $105 million settlement with the National Highway Traffic Safety Administration to settle charges it mishandled nearly two dozen recalls covering 11 million vehicles.
NHTSA named former Transportation Secretary Rodney Slater as an independent monitor oversee the company’s compliance with the three-year settlement that requires significant changes to how the automaker handles safety issues.
The suit is filed on behalf of all investors in Fiat Chrysler between Aug. 1 2014 and late July, when the settlement was announced. Any shareholder that wants to be named as the lead plaintiff must notify the court by Nov. 10. Typically, the largest investor who joins the suit is named the lead shareholder.
The lawsuit claims Fiat Chrysler made false and misleading statements and failed to disclose “flaws in the Company’s manufacturing processes, supply chain, electronic security measures: and its slow completion rates for recalls, slow or inadequate notifications to consumers, and faulty approaches to addressing safety issues and improper actions by dealers were not in compliance with federal laws and regulations.”
The suit cites several high profile recalls that resulted in Fiat Chrysler’s stock falling sharply, including its recall of 1.4 million SUVs for cyberhacking concerns in July. It notes that NHTSA in announcing the settlement said the company’s “pattern of poor performance put millions of its customers and the driving public at risk.”
Fiat Chrysler hasn’t yet filed a formal legal response the suit and didn’t immediately respond to a request for comment late Friday.
Securities fraud cases are difficult to win but often filed against companies accused of corporate wrongdoing. They argue people would not have invested in firms if they the firms had disclosed bad behavior earlier.
Fiat Chrysler has recalled a company record 11.4 million vehicles in 38 campaigns this year.