US fines BMW with $18 millions for inflating sales figures

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BMW will pay an $18 million fine to resolve allegations that it inflated its monthly sales figures in the United States for five years in a row.

The U.S. Securities and Exchange Commission (SEC) said Thursday that the German luxury automaker maintained an undeclared sales reserve that it used to meet its monthly targets from 2015 to 2019.

BMW divulged misleading information while raising about $18 billion in various corporate bond offerings

“Companies that access U.S. markets to increase their capital are required to provide reliable information to investors,” Stephanie Avakian, the director of the SEC’s surveillance division, said in a statement.

The actions helped BMW maintain a leading position in retail sales among other luxury automakers, the agency said.

BMW in North America also improperly adjusted its sales reporting schedule in 2015 and 2017 to meet domestic targets or to accumulate surplus sales for use in future months, according to the SEC. The undeclared sales reserve is known internally as “the bank,” the agency added. BMW also paid the concessionaires to designate vehicles as demonstration or loan vehicles so that they could be counted as sales, the SEC said.

The SEC said BMW cooperated with her research, even when the coronavirus pandemic forced her to close her offices and get her employees to work from home. The cooperation was taken into account when the penalty was imposed, the agency stressed.

BMW AG, BMW from North America and BMW US Capital did not admit or deny the agency’s findings. All three entities agreed to pay the fine and stop breaking securities laws.

In a statement, BMW said that much of the reported conduct occurred more than three years ago and that it was negligence. “There is no accusation or conclusion in the order that any BMW entity has committed an intentional infringement,” the company said. “The BMW Group attaches great importance to the accuracy of its sales figures and will continue to focus on complete and consistent sales reports.”

BMW is the second automaker to face sanctions for inflating its sales figures in recent years.

Last year, Fiat Chrysler agreed to pay $40 million to settle an SEC complaint alleging that the company deceived investors by exaggerating its monthly figures over five years. The company inflated its sales figures by paying dealers to report fake numbers from 2012 to 2016, the SEC said in a complaint.

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