trending Market Intelligence /marketintelligence/en/news-insights/trending/1n2yz2-3Vlm38CMvld-whA2 content esgSubNav
In This List

Nissan, ex-CEO Ghosn to pay $16 million in SEC settlement

Blog

Using ESG Analysis to Support a Sustainable Future

Video

S&P Capital IQ Pro | Powered by Expert Insights

Blog

Q&A: Streamlining Analytics for TCFD Reporting

Blog

Evergrande and the wider impact: a sentiment analytics based perspective


Nissan, ex-CEO Ghosn to pay $16 million in SEC settlement

Japanese automaker Nissan Motor Co. Ltd., its ex-CEO Carlos Ghosn and former director Greg Kelly will pay more than $16 million in fines to settle charges in the U.S. related to false financial disclosures, the Securities and Exchange Commission said on Sept. 23.

The SEC filed settled fraud charges against Nissan, Ghosn and Kelly, alleging that the automaker omitted from disclosures more than $140 million to be paid to Ghosn in retirement, according to an SEC news release. The regulator added that Ghosn never received the money.

Nissan agreed to pay a $15 million civil penalty and to cease and desist from violating anti-fraud provisions, the SEC said. Ghosn will pay a $1 million civil penalty and agreed to a 10-year ban from being an officer or director. Kelly will pay $100,000 with a five-year officer and director bar along with a five-year suspension from practicing as an attorney.

Nissan, Ghosn and Kelly settled without admitting or denying the SEC's allegations and findings.

The SEC said Nissan's board allowed Ghosn to set individual executive and director compensation levels, including his own. From 2009 until 2018, Ghosn conspired with Kelly and subordinates at Nissan to conceal more than $90 million of compensation from public disclosure, the SEC said. The regulator also said Ghosn increased his retirement allowance by more than $50 million.

Ghosn was arrested in November 2018 in Japan over allegations that he had misreported his personal income and used company money to cover personal expenses.

According to the SEC, Ghosn and his subordinates, which included Kelly, created ways to structure payment of the undisclosed income after Ghosn's retirement. This included secret contracts, backdating letters and changing the calculation of Ghosn's pension allowance.

"Investors are entitled to know how, and how much, a company compensates its top executives. Ghosn and Kelly went to great lengths to conceal this information from investors and the market," Stephanie Avakian, co-director of the SEC's enforcement division, said in the release.

Steven Peikin, co-director of the enforcement division, said Nissan "advanced Ghosn and Kelly's deceptions and misled investors, including U.S. investors."

Nissan is currently searching for a new CEO after the incumbent Hiroto Saikawa announced Sept. 9 that he would step down in the wake of the Ghosn affair and period of poor performance.

In an emailed statement, Nissan said it is "firmly committed to continuing to further cultivate robust corporate governance."

"The SEC's settlement order states that the perpetration of fraudulent conduct by former Chairman and Representative Director Carlos Ghosn, with substantial assistance from former Representative Director Greg Kelly, serves as the basis for Nissan's liability," the statement said.

"As noted in the order, Nissan provided significant cooperation to the SEC and has promptly implemented remedial acts to prevent recurrence, including transitioning to a new governance structure with three statutory committees (audit, compensation and nomination). Nissan has also amended its securities reports for all relevant fiscal years."

Ghosn and Kelly could not immediately be reached for comment.