US: Fiat Chrysler to face lawsuit over compliance of safety

Fiat Chrysler Automobiles will have to face a lawsuit, which claims that the company defrauded its shareholders by overstating its ability to comply with vehicle safety laws. In late 2014, the company had claimed that its cars were substantially compliant with the safety laws even though it was examined by National Highway Traffic and Safety Administration (NHTSA) for shortcomings which resulted in two recalls.

The Judge has also allowed the shareholders to pursue compliance disclosure claims against Sergio Marchionne - the company's CEO and Scott Kunselaman - the former safety chief of FCA US unit, to which FCA replied saying that it would defend itself against the surviving claims.

The investors could and likely would have interpreted Fiat Chrysler's statement that its cars were compliant with all the applicable regulations. This could have been misleading as NHTSA began probing the automaker, which made them monitor the safety issues closely. Post this, the company admitted to widespread noncompliance and started the recalls.

Source: ET Auto