SEC reaches deal to settle Nissan allegations

TOKYO — The U.S. Securities and Exchange Commission announced Monday that it had reached a deal with Nissan Motor Co. to settle allegations that it had concealed from investors a plan to pay more than $140 million in retirement benefits to its former chairman, a scandal that led to criminal charges against the Japanese carmaker and rattled the world’s largest auto alliance.

The company will pay a $15 million fine to settle the civil fraud charges. The former chairman who was to get the undisclosed compensation package, Carlos Ghosn, agreed to pay a $1 million penalty.

The settlement is the latest fallout from the November arrest of Ghosn, who was the architect of the alliance between Nissan, Mitsubishi and Renault, on suspicion of attempting to hide part of his compensation from investors and regulators. He is free on bail in Tokyo, where he faces four charges of financial wrongdoing.

The SEC opened its inquiry in January in response to charges brought by Japanese prosecutors against Ghosn that he conspired with Greg Kelly, a former Nissan director, to conceal a retirement payout that was never completed. Regulators said the scheme unfolded over a roughly nine-year period, ending only with the cases against them. Nissan itself was also indicted on related charges.

The SEC found that Ghosn, Kelly and others at Nissan concealed more than $90 million in future payouts to Ghosn and took steps to increase his retirement compensation by more than $50 million.

“Simply put, Nissan’s disclosures about Ghosn’s compensation were false,” said Steven Peikin, the SEC co-director of enforcement. “Through these disclosures, Nissan advanced Ghosn and Kelly’s deceptions and misled investors.”

Nissan, Ghosn and Kelly — who agreed to pay a $100,000 fine — neither admitted nor denied wrongdoing under the terms of the settlement.

Ghosn’s legal team said the settlement with the SEC will enable them and their client to focus on the criminal trial in Japan, which is expected to begin in April.

The SEC’s announcement came as Nissan finds itself in the midst of its deepest crisis in two decades, just as the car industry faces costly new challenges.

In the past year, the company has weathered scandal after scandal, starting with the arrest of Ghosn and culminating earlier this month in the sudden resignation of its chief executive, Hiroto Saikawa, after he admitted to receiving unearned compensation.

As the company searches for new leadership, it faces a dire financial situation: It is in the process of cutting 12,500 jobs and its profits have all but evaporated amid sluggish demand in Europe and its largest market, the United States, where a stale product lineup has failed to draw customers’ interests.

And the costs of Ghosn’s ouster have continued to mount: The company faces a potentially costly securities suit in the United States, as well as the possibility in Japan of fines and future legal action related to the case.

Nissan completed a nearly yearlong investigation into Ghosn earlier this month. In a summary of the findings that was released to the public, the company claimed that Ghosn’s and Kelly’s actions had “resulted in violation of Nissan’s obligation to disclose compensation received by directors in the company’s annual securities reports.”

It also said that Ghosn had misused company assets for his personal benefit.