Navistar International Corp has agreed to pay $7.5 million in penalties for allegedly misleading investors. The investors were reportedly made to believe of an advanced technology truck engine that could be registered to meet the U.S. emission standard.
Navistar committed to pay the penalties without admitting or dismissing the charges, Fox Business reported. Despite the settlement, former Navistar CEO Daniel C. Ustian faces separate charges for helping and abetting violations by the company. According to the court filing, the SEC accused Ustian of failing to admit the company's difficulty in acquiring an Environmental Protection Agency certification of a truck engine. The certification is part of the procedure to meet the Clean Air Act Standards that started in 2010.
"When public companies and top executives discuss important regulatory developments with investors, they must tell the whole truth," said SEC director of enforcement Andrew J. Ceresney. "Here, we allege that Navistar and its former CEO misled investors about their dealings with the EPA and the likely approval of its new emissions technology."
Navistar spokeswoman Lyndi McMillan said a settlement is necessary for the interest of Navistar and its stockholders, ABC News Go reported. McMillan added that the settlement would avoid further costs and disagreement with the SEC. She reiterated that Navistar is focused on building and sustaining momentum on behalf of their shareholders. The Lisle, Illinois-based company also said it is already time to put the issue behind them. Meanwhile, the former Navistar CEO hasn't settled yet the class action lawsuit filed against him.
Auto News notes that Navistar misled the investors by making them believe that an EPA certification is being processed. The company allegedly spent over $700 million to develop its technology called exhaust gas circulation (EGR) in order to lessen nitrous oxide emissions. However, Navistar left the development of its EGR and had been satisfied with the technology utilized by its competitor. The SEC accuses Ustian of "progressively desperate and fraudulent scheme" by launching conference calls and press releases that only deceived the investors more.
It was too late for Navistar when it declared it's abandoning of the EGR technology in 2012. The former CEO resigned in August of 2012. If Ustian would be proven guilty, he would have to pay civil penalties, and be prohibited on serving as an officer or as a director of public companies.
