Published: Tue, July 19, 2016
Economy | By Melissa Porter

FCA Sales-Reporting Lawsuit Escalates to Federal Probe

FCA Sales-Reporting Lawsuit Escalates to Federal Probe

The company has reported 75 consecutive months of sales growth in the U.S. FCA has been riding trucks and SUVs - especially those made by the Jeep brand - to record sales. "In certain limited circumstances where sales are made directly by FCA US, such sales are reported through its management reporting system".

FCA has said the lawsuit is without merit.

Fiat Chrysler also added it had fielded questions from the Justice Department on a similar matter.

FCA said it is cooperating with The Securities and Exchange Commission and The Department of Justice.

This past January, Fiat Chrysler (FCA) was enjoying its 69th month of year-over-year sales gains, though now there's some doubt over this claim.

The Napleton lawsuit alleges that a competing dealership reported 85 false new vehicle sales and got tens of thousands of dollars in return. The racketeering lawsuit alleges dealers were offered money if they reported vehicles as sold even if they were still sitting on the lots.

Napleton's boss claims the carmaker offered it $20,000 in exchange for falsely reporting the sales of 40 new vehicles.

The dealerships' attorney denied they were missing any sales target set by Fiat Chrysler. According to the sources, federal prosecutors are reportedly looking into whether Fiat Chrysler broke USA securities laws, though greater specifics were unavailable.

FCA says that it will comply fully with the investigation, though exactly what is being looked into is still unknown. The stock's 52-week range is $5.45 to $10.93. The shares recovered after the Fiat Chrysler announcement, rising less than 1% to $6.76 at 3:14 NY. In essence, the motor company is stating that it could inflate sales because its revenue recognition comes from the sale to the dealer.

Fiat Chrysler has asked a judge to dismiss the lawsuit, arguing in part that the company was unable to predict the outcome of the regulator inquiry at the time it put away funds for a possible resolution.

FCA has had prior run-ins with USA authorities, when past year it was forced to pay a $105 million fine to the National Highway Traffic Safety Administration for improper handling of two dozen safety-related recalls.

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