WASHINGTON -- The U.S. Justice Department has started a preliminary investigation into how General Motors handled the recall of 1.6 million vehicles with faulty ignition switches linked to at least 12 deaths.
The inquiry is focusing on whether GM might have violated criminal or civil laws by failing to notify regulators in a timely fashion about the switch failures, said a person familiar with the probe, who asked not to be named and isn’t authorized to discuss investigations.
Lawyers in the U.S. Attorney’s office in the Southern District of New York are leading the investigation.
Meanwhile, GM has lowered the number of deaths linked to one of the models covered by the recall to four from five.
In a letter to the National Highway Traffic Safety Administration posted Tuesday evening on the agency's Web site, GM said that a front-seat passenger killed in a Saturn Ion crash had been counted twice because two reports about the accident had been filed. That reduces the number of deaths tied to the defective switches to 12 from 13, a GM spokesman said.
The criminal probe of GM opened by Manhattan U.S. Attorney Preet Bharara follows an investigation conducted by the same office into Toyota Motor Corp.'s disclosure in 2009 of driver complaints of unintended acceleration in some of its vehicles.
Toyota has been engaged in negotiations with Bharara's office to settle that probe, which is also criminal, a source familiar with the investigation previously told Reuters.
Emily Pierce, a Justice Department spokeswoman, declined to comment on the GM investigation. GM also declined to comment on the department's probe.
The inquiry comes as House and Senate committees and the National Highway Traffic Safety Administration are also investigating GM’s actions leading up to the recall.
While the immediate financial impact of the recall is “insignificant,” some hard-to-quantify risk to GM's reputation is emerging, Joseph Spak, an RBC Capital Markets analyst, said in a note to investors on Tuesday.
"Obviously, the longer this stays in the headlines the worse it could be for GM," he said.
“Remember while this was old (pre-bankruptcy) GM, the consumer won’t differentiate,” Spak said. “It does appear that GM employees have known about the risk for a while, so it does seem there is a failure to act somewhere along the way.”
GM shares tumbled 5.2 percent to close at $35.18 in New York trading on Tuesday, its worst one-day drop at the close since March 2012.