Nissan confirms SEC probe following indictments in Japan

TOKYO – Nissan faces an inquiry from the U.S. Securities and Exchange Commission following the automaker’s indictment in Japan for allegedly making false disclosures in its annual securities reports about compensation owed to former chairman Carlos Ghosn.

Nissan spokesman Nicholas Maxfield confirmed the SEC inquiry on Monday and said the Japanese automaker was cooperating. The company could provide no further details, Maxfield said.

Bloomberg News reported earlier in the day that the U.S. financial regulator is investigating whether Nissan properly disclosed its executive pay in the U.S.

Nissan faces two indictments in Japan for allegedly violating the country’s Financial Instruments and Exchange Act for underreporting deferred compensation to Ghosn.

Authorities say Nissan failed to report tens of millions of dollars covering two periods, the first in the 2010-2014 fiscal years, the second in the 2015-2017 fiscal years.

The charges form the backbone of the explosive allegations that triggered the Nov. 19 arrest of Ghosn at Tokyo’s Haneda airport and his eventual ouster as chairman of not only Nissan but Mitsubishi and Renault. Also charged in the alleged scheme is Greg Kelly, the American Nissan director accused of helping Ghosn hide compensation for payment sometime in the future.

Both men maintain their innocence. But if convicted, they face up to 10 years in prison on each count. Nissan faces a potential fine. It has said it will restate earnings to reflect the under-reported pay, which authorities say should be have been booked at the time it is decided, not disbursed.

The revelation of a U.S. probe adds to Nissan’s headaches as Japan’s No. 2 automaker undergoes a sweeping review of corporate governance and tries to smooth strained relations with French automaker Renault, which owns a controlling 43.4 percent stake in its Japanese partner.

The SEC inquiry is focused on whether lapses by Nissan in reporting on its executive pay violated U.S. securities law, Bloomberg reported, citing several people familiar with the matter.

Nissan shares trade in the U.S. through American Depositary Receipts.

Bloomberg said the SEC usually has enforcement authority over ADRs. But the report said U.S. courts have also disagreed over whether the SEC has jurisdiction in some cases where wrongdoing occurred overseas. The activities targeted by Japanese prosecutors took place mostly in Japan.