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SEC: BMW Violated Anti-Fraud Provisions While Raising $18 Billion From Investors

The Securities and Exchanged Commission (SEC) popped BMW with an $18 million fine recently. The SEC announced that the charges against BMW AG and two of its US subsidiaries were for sharing both inaccurate and misleading information about BMW’s retail sales volume…

The Securities and Exchanged Commission (SEC) popped BMW with an $18 million fine recently. The SEC announced that the charges against BMW AG and two of its US subsidiaries were for sharing both inaccurate and misleading information about BMW’s retail sales volume in the US while raising around $18 billion from investors in several corporate bond offerings, and that those charges have now been settled.

The SEC’s order found that BMW AG, BMW NA, and BMW US Capital violated antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933. Although BMW didn’t admit nor deny anything, it agreed to pay the $18 million fine and completely stop violating the provisions.

BMW relied on a reserve of unreported car sales that it used to meet its sales targets between 2015 and 2019 — using them regardless of when the sales took place in order to shore up low-sales months. It also falsely designated some of its vehicles as sold when they had not yet been sold. The company even adjusted its sales reporting calendar in 2015 and 2017 to meet targets and/or bank excess sales for future use.

Stephanie Avakian, the SEC enforcement director, shared her thoughts on the settlement. “Companies accessing US markets to raise capital have an obligation to provide accurate information to investors. Through its repeated disclosure failures, BMW misled investors about its US retail sales performance and customer demand for BMW vehicles in the US market while raising capital in the US.”

BMW was all too happy to resolve this issue and noted in a statement that the SEC praised the company for cooperating. “Much of the conduct at issue in the SEC settlement occurred over three years ago,” the company said. “The order is based on US securities laws which can be satisfied by negligence. There is no allegation or finding in the order that any BMW entity engaged in intentional misconduct.” In other words, they want you to forget about it since it happened years ago and the SEC gave them a cookie for not crying when their hands were popped. More generously, they didn’t realize what they were doing was illegal, so they are just getting a warning and relatively small fine.

Something Strange

Do you want to know something that I found odd? It was this:

That is a simple Google search with the keywords “BMW SEC fraud.” I had to dig for the news articles of a story that broke on a Friday around 9:00 PM. I think it may have been my keywords, especially since when I googled the headline itself, I found a lot more articles. However, it’s odd that they top articles I found in Google were from December of 2019.

If this had been Tesla being charged with fraud by the SEC, there would have been news articles from every media source — from People, Vanity Fair, and Jalopnik to CNN, Yahoo Finance, Seeking Alpha, and more. I mean, $18 billion was taken from investors based on false information. If this was Tesla, Elon Musk would be getting slammed and dragged all over the news.

Bernie Sanders would have taken to Twitter to tell everyone what a horrible person Elon Musk is, and how he’s trying to rob the poor — something he’s been doing a lot there recently. However, we don’t see Bernie and other notable figures criticizing a foreign company for its apparently fraudulent actions. Don’t get me wrong — I’m a fan of Bernie — but as a fan, I want to see him realize just how wrong he is about Elon Musk and Tesla. I don’t think it’s right for politicians to take potshots at the few people who do care about the same issues as they do — especially when those issues are the air we breathe and the planet we call home.

Although I’m not trying to make this about Tesla, I am pointing out the hypocrisy of the mainstream media and calling into question why that is. The mainstream media barely touched Lake Charles after Hurricane Laura hit. The media has a large amount of influence, and whatever it focuses on, it intensifies as a news item. The choice of focus could often be better guided to actually serve our society.

The media has a vast amount of power — power that has been used for good many, many times. However, it also has a dark side when it puts that laser focus onto something that disagrees with it or that someone in power doesn’t like. When Elon Musk called into question the accuracy of some journalists, many in the profession perceived this as an all-out cry of war and have been intent on tearing Elon down every chance they get. In reality, Elon was just defending himself against false and misleading headlines. Yet again, this story highlights the imbalance of coverage in the sector.

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Written By

Johnna owns less than one share of $TSLA currently and supports Tesla's mission. She also gardens, collects interesting minerals and can be found on TikTok


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