The Springfield News-Sun will continue to provide unmatched coverage of Navistar and it’s impact on the region’s economy. The paper has provided award-winning coverage of the company’s recent attempts to regain profitability after struggling with a failed engine technology.
Navistar reached a $7.5 million settlement with the Securities and Exchange Commission this week, after the federal agency alleged the company misled investors regarding the company’s attempts to develop a truck engine technology that failed to meet U.S. EPA standards.
Navistar neither admitted or denied the charges as part of the agreement, according to information from the SEC. Separately, the SEC also filed a complaint in the U.S. District Court in the Northern District of Illinois alleging Dan Ustian, the company’s former CEO, misled investors by aiding and abetting the company.
No contact information could be found for Ustian and he could not be reached for comment.
The company, based in Lisle, Ill., is a significant employer in Clark County, with approximately 1,500 workers at its Springfield manufacturing plant, including management and contractors. And thousands of the company’s retirees live in the region. Last year, Navistar reached a joint agreement with GM that is expected to bring at least 300 new jobs to Springfield, including about $32 million in investments at the plant. The new trucks that would be produced as part of the deal are expected to go into production in 2018.
Ustian has since retired from the company. Troy Clarke, a former chief labor negotiator for GM, took over as CEO in 2013.
Company officials said Friday the settlement will allow them to move forward as they continue to improve Navistar’s reputation and profitability.
“We believe that it was time to put this matter behind us and that this settlement was in the best interests of Navistar and its stockholders,” said Lyndi McMillan, a spokeswoman for Navistar. “Settling this matter will avoid the expense and distraction of a potential dispute with the SEC and allow us to continue our focus on building and sustaining momentum on behalf of our shareholders.”
The Springfield facility faced an uncertain future just a few years ago as Navistar struggled with an engine technology for heavy-duty trucks that failed to meet standards set by the Environmental Protection Agency. The company abandoned that technology in 2012, despite investing about $700 million into the system, according to court records. Instead, it began using engines developed by a competitor.
“We allege that in 2011 and 2012, the EPA repeatedly raised serious concerns with Navistar about its applications to certify an engine using EGR technology and that top Navistar officials knew the company had not succeeded in developing a commercially viable engine that would meet EPA standards,” said David Glockner, director of the SEC’s Chicago Regional Office in a press release. “Navistar and its then-CEO misled investors about these difficulties in numerous SEC filings, press releases, and public conference calls, and today we seek to hold them accountable for that misconduct.”
According to information from the SEC, Navistar applied for certification of its engine technology in 2011 even though company officials knew it was not ready for production and sale, in an effort to reassure investors. The EPA did not approve the application. Later that year, Navistar began preparing another application for certification.
EPA staff told company officials the proposed engine did not appear to meet the certification requirements. But just four days later, the company filed an annual report that stated it planned to apply to have the EPA certify the technology and that they believed it would meet certification requirements, according to the SEC.
Navistar submitted a new application in 2012, and EPA officials said several “serious concerns” needed to be resolved before the application could be approved. But in filings and a press release that year, Ustian indicated certification was proceeding in a normal timeframe and production could begin in June of that year, the SEC said.
In May 2012, Navistar withdrew that application as well, and submitted a third one, SEC officials said. Navistar officials were told that application was also unlikely to be approved as well. But in a quarterly filing later that year, Navistar officials said they were unaware of any concerns by the EPA regarding the most recent application.
Navistar announced it would withdraw that application as well in July 2012, according to the SEC.
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