Fiat Chrysler, Execs Hit with Stock Drop Suit Over UAW ‘Bribery Scheme’

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Fiat Chrysler, its current CEO and CFO, and the co-executors of its deceased former CEO’s estate face a proposed class action lawsuit that charges investors were for years misled about the automaker’s role in an alleged bribery scheme involving the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). The overarching aim of the defendants’ alleged bribery was to obtain favorable terms in Fiat’s collective bargaining agreement with UAW, according to the complaint.

The Fiat Chrysler investor behind the 19-page suit claims the defendants issued between February 26 and November 20, 2019 materially false and/or misleading statements concerning the automaker’s business and operations. At particular issue in the case are a number of Securities and Exchange Commission (SEC) disclosures issued between February 2016 and February 2019 that purported, among other assurances, that Fiat Chrysler was committed to complying with anti-bribery, anti-money laundering and pro-competition laws. Further, the defendants’ statements during that time period, the suit says, relayed that no one with the organization “shall, directly or indirectly, give, offer, request, promise, authorize, solicit or accept bribes” or any other gift or gratuity in connection with their work for the company for any reason.

The complaint goes on to state that the FBI in June 2017 filed an indictment against Fiat Chrysler’s former labor relations chief on allegations that the individual improperly funneled money to UAW officials for use at the union’s UAW-Chrysler National Training Center. In response, the lawsuit goes on, Fiat Chrysler distanced itself from the charges by issuing a statement in which it claimed the company and UAW were “victims of malfeasance by certain of their respective employees” who acted unbeknownst to nor sanctioned by the entities. 

As the lawsuit tells it, Fiat Chrysler’s story came crashing down when it was hit on November 20, 2019 with a federal racketeering lawsuit filed in Michigan by General Motors. The case sought damages stemming from an alleged bribery scheme perpetrated by Fiat Chrysler and UAW that GM claimed was authorized by those at the highest levels of the company. Fiat Chrysler’s alleged conduct, the suit says, helped the automaker “win union acceptance of cost concessions in 2011 and 2015.”

When news of GM’s lawsuit broke, Fiat Chrysler stock fell $0.58 per share, or nearly 3.72 percent, allegedly injuring investors.