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GM ignition switch recall: SEC opens investigation

April 29, 2014
2 min to read


Via Michigan Live


DETROIT — U.S. securities regulators are looking into General Motors' delayed recall of more than 2 million cars with a deadly ignition switch problem.


GM disclosed in a quarterly report Thursday that the Securities and Exchange Commission has made inquiries about the recall. It also confirmed for the first time that the U.S. Attorney's office in New York and an unidentified state attorney general are conducting investigations. Congress and federal highway safety regulators also are investigating.


The SEC likely is probing whether GM failed to disclose the switch problem to investors quickly enough, said Peter Henning, a former SEC lawyer who now is a law professor at Wayne State University in Detroit.


GM is recalling 2.6 million older small cars because the switches can unexpectedly slip out of the "run" position. That can shut down the engine, knock out the power-assisted steering and brakes and disable the air bags. Drivers can lose control of their cars and crash.


The company, which has linked 13 deaths to the problem, has acknowledged that engineers knew about it more than a decade ago. Also, CEO Mary Barra has said she was told of the problem in December, yet it was not disclosed in the company's annual report filed in February.


"That's what the SEC is looking at," said Henning. "If it should have been picked up, or it should have been included in the company's financials, it could be a violation of securities law."


A spokeswoman for the SEC would neither confirm nor deny that the agency is investigating. A message was left for a GM spokesman.


GM also disclosed that it faces 60 class-action lawsuits in the U.S. and Canada from people alleging that their cars have lost value because of the recalls. And it faces shareholder lawsuits alleging that it failed to monitor and disclose the ignition switch problem.

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