A half dozen law firms from around the United States have filed class-action lawsuits claiming Fiat Chrysler Automobiles N.V. defrauded shareholders withholding information about FCA’s efforts to bribe officials of the United Auto Workers.
The lawsuits are asking damages from FCA for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
Last month, General Motors Co. filed a federal racketeering lawsuit against Fiat Chrysler and its former executives, accusing Fiat Chrysler of bribing United Auto Workers officials to receive more favorable terms in labor negotiations.
Specifically, GM alleged that Fiat Chrysler “corrupted” collective bargaining agreements between GM and UAW in 2009, 2011 and 2015 by paying millions in dollars in bribes, and that the alleged scheme was authorized at the highest levels of Fiat Chrysler, including the company’s late Chief Executive Officer Sergio Marchionne.
The lawsuits claim that throughout the defendants made false and/or misleading statements and/or failed to disclose that FCA employed a bribery scheme to obtain favorable terms in its collective bargaining agreement with the UAW.
High-ranking Fiat official were aware of and authorized the scheme; and due to the foregoing, defendants’ statements about Fiat’s receivables, business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.
The complaint alleges that the market learned the truth on Nov. 20, 2019, when General Motors filed an unprecedented racketeering lawsuit against Fiat, accusing Fiat of engaging in a decade-long labor corruption conspiracy with IAW designed to force GM’s merger with Fiat.
On this news, Fiat’s shares fell sharply, wiping out nearly $1 billion in market capitalization in a single trading day.
“We’re focused on investors’ losses and holding Fiat accountable for concealing this massive labor corruption scheme,” said Reed Kathrein, a partner at law firm Hagens Berman.
An FCA spokesperson said the lawsuits without any substance. “These are typically opportunistic ‘coattail suits’ which we view as meritless,” she said.
Three FCA executive and seven UAAW officers and officials have pled guilty in the ongoing federal investigation into corruption in the UAW.
The UAW has acknowledged the corruption in its senior ranks has and its new president, Rory Gamble, has issued a series of new rules and hired additional auditors to protect against future abuses of union finances and programs. The union, however, has yet to make a full report on the past problems that led to the federal investigation.