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GM Settles SEC Claim About Ignition Switch Accounting Lapse
General Motors Co. has settled charges that internal accounting flaws blocked it from assessing the economic impact of defective ignition switches blamed for 124 deaths and at least 275 significant injuries.
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General Motors Co. has settled charges that internal accounting flaws blocked it from assessing the economic impact of defective ignition switches blamed for 124 deaths and at least 275 significant injuries.
The $1 million settlement resolves an administrative order by the U.S. Securities and Exchange Commission. GM neither admits nor denies wrongdoing and says the agreement does not call into question any of its current or past financial statements.
The SEC notes that GM realized in 2012 that the switches were a safety problem but failed to apply accounting guidance rules to the issue for more than a year. The commission notes that carmakers are required to assess the likelihood of potential recalls and estimate their financial impact.
GM ultimately spent more than $2 billion on compensation, fines and lawsuits related to the 1.6 million defective switches it began recalling in February 2014. The device could be easily jogged out of the “run” position, thereby abruptly shutting off the engine, power steering, power brakes and airbags.
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