Navistar reaches settlement with SEC over allegation of misleading investors

By Charlie Morasch, Land Line contributing writer | Tuesday, April 05, 2016

The maker of International trucks has reached a settlement with the Securities and Exchange Commission over allegations the Illinois-based company misled its investors about technology it developed to meet emissions standards.

Lisle, Ill.-based Navistar will pay the SEC $7.5 million. The company didn’t admit or deny any findings in the SEC’s order.

“We believe that it was time to put this matter behind us and that this settlement was in the best interests of Navistar and its stockholders,” said Lyndi McMillan, a spokeswoman for Navistar. “Settling this matter will avoid the expense and distraction of a potential dispute with the SEC and allow us to continue or focus on building and sustaining momentum on behalf of our shareholders.”

In a matter unrelated to the settlement, the SEC has filed a complaint in federal court in Illinois alleging that former Navistar CEO Daniel Ustian misled investors by not fully disclosing difficulties obtaining EPA certification to meet emissions standards for 2010.

“When public companies and top executives discuss important regulatory developments with investors, they must tell the whole truth,” said Andrew Ceresney, director of the SEC division of enforcement, according to a news release.

In 2015, Navistar was served with a $300 million lawsuit by EPA for International diesel truck engines that allegedly didn’t meet federal emissions standards while using the company’s patented Exhaust Gas Recirculation, or EGR emissions system.

The EGR system was proprietary technology developed by Navistar for International trucks and buses, which the company believed would help give it a leg up while all diesel competitors used selective catalytic reduction, or SCR, technology. After enough regulatory emissions issues, Navistar abandoned EGR and embraced SCR in July 2012.

Navistar spent an estimated $700 million on the failed technology.

One week after the filing of the EPA suit last year, the California Air Resources Board announced it had fined Navistar $250,000 after the company failed to properly demonstrate that its diesel particulate filter system met in-use compliance requirements. CARB said about 200 International’s DPX Catalyzed Soot Filter Systems were sold in California before the error was discovered.

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