When Mike Manley was thrust into the role of CEO of Fiat Chrysler Automobiles in 2018 as his predecessor, Sergio Marchionne, lay dying, the longtime Jeep executive faced several daunting challenges — including an array of legal messes.
The company's alleged actions under Marchionne's watch left his successor with little choice but to break out the company's checkbook and clean up things as best he can.
On Sept. 27, FCA US agreed to pay a $40 million fine in a settlement with the SEC, which accused it of inflating its monthly sales reports for years. The securities regulator found that FCA had violated five provisions of securities laws between August 2012 and July 2016. It was in 2016 that FCA restated six years of monthly sales reports and admitted that its much-touted "iron man streak" of more than six years of year-over-year monthly sales gains had, in fact, ended in 2013.
According to the SEC, employees in "most" of FCA's nine regional business centers "engaged in fake sales reporting," including paying dealers for reporting fake sales and sales reported to "fictitious customers." Lest anyone think these were just the acts of rogue employees, the investigation found the company maintained a "cookie jar" of unreported fleet sales that could be utilized by top brass to keep the streak alive — and keep shareholders in the dark about the company's actions.
It's worth noting that FCA didn't admit guilt in its SEC settlement — but at the same time, it's withholding the bonus pay of longtime sales chief Reid Bigland.
When Automotive News began reporting that FCA US may have been manipulating its monthly sales reports, the company, at Marchionne's direction, vehemently denied the very actions for which it later paid tens of millions of dollars.
Those denials should be remembered as the automaker addresses other legal issues lingering from Marchionne's reign, including that it allegedly used defeat device software during emissions testing of its diesel vehicles, and that it allegedly paid millions to corrupt officials at the UAW in an effort to buy labor peace.
Marchionne's legacy as the modern automotive industry's consummate deal-maker is long secured, and his accomplishments are already ensconced in the Automotive Hall of Fame.
But in legal terms, he left a very large mess for Manley and others to clean up.