Navistar receives SEC notice of possible enforcement action

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Updated Sep 4, 2015

A multi-million negative quarter wasn’t the only bad news Navistar received this week. The financially embattled truck and engine maker said on its earnings call Wednesday morning it has received a Wells notice from the U.S. Securities and Exchange Commission (SEC).

A Wells notice is a letter sent by the SEC when it plans to bring an enforcement action against a person or company. On the call, Bill Kozek, Navistar’s president of truck and parts, offered no detail on the notification or Navistar’s response, but acknowledged it had been received.

“…we really can’t comment on this as it may develop into pending litigation,” he says. “There’s an opportunity for us to respond. We’re kind of in that process right now, so it really wouldn’t benefit us, nor I think the process, from really talking too much about it at this time.”

The SEC is investigating Navistar and former chief executive Dan Ustian’s alleged violations of disclosure and transparency of financial statement regulations, but the company has also come under fire over Environmental Protection Agency (EPA) certifications and disclosures related to Ustian’s departure three years ago. Subpoenas over the EPA matter date back to 2012 as the agency looks into whether the Navistar misrepresented its efforts to earn EPA certification for its engines.

Monday, U.S. Magistrate Judge Sidney I. Schenkier issued an order requiring production of a second set of documents Navistar claimed to be privileged in response to investigative subpoenas issued by SEC staff.

Navistar has the option to formally respond to the Wells notice with a “submission,” which could detail why the company believes the SEC should drop its case, among other things. The SEC has 180 days after issuing a Wells notice to decide whether proceed with enforcement action.




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