GM to pay $1 mln to resolve SEC accounting case tied to ignition switch

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By Nate Raymond and David Shepardson

<span class="articleLocation”>General Motors Co has agreed to pay $1
million to resolve a U.S. Securities and Exchange Commission
accounting case related to a faulty ignition switch linked to
124 deaths and 275 injuries, the regulator said on Wednesday.

The deal would resolve charges that accounting control
failures at the automaker prevented GM from properly assessing
the potential financial impact of the defective ignition switch,
which led to vehicle recalls beginning in 2014, the SEC said.

The largest U.S. automaker said in a statement it consented
to an administrative SEC order, without admitting or denying any
wrongdoing. “The SEC settlement does not call into question any
of GM’s current or prior financial statements or its
disclosures,” GM said.

The SEC said GM’s internal investigation involving the
defective ignition switch was not brought to the attention of
its accountants until November 2013 even though other GM
personnel understood in the spring of 2012 that a safety issue
was at hand.

“Internal accounting controls at General Motors failed to
consider relevant accounting guidance when it came to
considering disclosure of potential vehicle recalls,” said
Andrew M. Calamari, director of the SEC’s New York Regional
Office, said in the statement.

Automakers must assess the likelihood of “whether the
potential recall will occur, and provide an estimate of the
associated loss or range of loss or otherwise provide a
statement that such an estimate cannot be made,” the SEC said.

GM incurred ignition switch-related costs of more than $2
billion and set aside billions more for other recalls in 2014
and 2015.

In 2015, GM paid $900 million to settle a U.S. Justice
Department criminal investigation. It also set aside nearly $1.1
billion to settle lawsuits from investors and owners and pay
injury and death claims stemming from the ignition switch
recalls.

The fine is a fraction of the $152.4 billion in net revenue
GM reported in 2015.



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