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US securities regulators are looking into General Motors’ delayed recall of more than 2 million cars with a deadly ignition switch problem.
GM disclosed in a quarterly report on Thursday that the Securities and Exchange Commission (SEC) has made inquiries about the recall. Congress, federal highway safety regulators and attorneys general for the states of New York and Florida also are investigating.
GM’s report disclosed New York’s investigation for the first time, but left unidentified the state of Florida, whose attorney general announced later on Thursday that it was part of the investigation.
The car company announced on Thursday that its first-quarter profits plunged by 88% after it announced the recall.
The SEC is likely to be investigating whether GM failed to disclose the switch problem to investors quickly enough, said Peter Henning, a former SEC lawyer who now is a law professor at Wayne State University in Detroit.
GM is recalling 2.6 million older small cars because the switches can unexpectedly slip out of the “run” position. That can shut down the engine, knock out the power-assisted steering and brakes and disable the air bags. Drivers can lose control of their cars and crash.
The company, which has linked 13 deaths to the problem, has acknowledged that engineers knew about it more than a decade ago. Also, chief executive Mary Barra has said she was told of the problem in December, yet it was not disclosed in the company’s annual report filed in February.
“That’s what the SEC is looking at,” said Henning. “If it should have been picked up, or it should have been included in the company’s financials, it could be a violation of securities law.”
A spokeswoman for the SEC would neither confirm nor deny that the agency is investigating. A message was left for a GM spokesman.
GM also disclosed that it faces 60 class-action lawsuits in the US and Canada from people alleging their cars have lost value because of the recalls. And it faces shareholder lawsuits alleging that it failed to monitor and disclose the ignition switch problem.