|
NEW YORK (CNN/Money) -
General Motors Corp. confirmed Wednesday evening that the Securities and Exchange Commission has subpoenaed records from it about its accounting practices, creating further headaches for the already embattled automaker.
The world's largest automaker disclosed in an SEC filing that it had received subpoenas from the agency related to a variety of topics, including concerns over pension and retiree health care costs, transactions between GM and its former parts unit, Delphi, which filed for bankruptcy court protections earlier this month, the automaker's recovery of recall costs from suppliers and supplier price reductions or credits.
It also disclosed its finance unit, GMAC, has received subpoenas in a separate probe of insurance industry practices related to use of products such as finite risk insurance to control reported losses.
Shares of Dow component GM (Research) lost about 2 percent in after-hours trading on Inet following the disclosure.
Check out stocks in the auto sector
GM had previously disclosed that the SEC was looking into practices related to retiree pension and health care costs. The agency's demands for records in that case weren't a surprise after a competitor, DaimlerChrysler, on Tuesday disclosed in its own SEC filing that it had received a subpoena related to the SEC's probe of GM's accounting practices. The German-American automaker said the agency wanted information about the accounting methods it has used for pensions in North America.
The filing by DaimlerChrysler prompted GM to make the disclosure of the subpoena Wednesday evening rather than wait until its upcoming 8k filing, according to someone close to the situation.
The pension and health care costs for retirees is a major competitive burden for GM, which announced a deal with the United Auto Workers union to trim its health care spending by about $1 billion a year.
GM has said that its pension plans are fully funded, although the expected cost of health care for the retirees is covered by the company, not paid out of pension assets. But GM's downgrade of its credit status to junk bond status could cause the government to change the way it judges whether the pension plans are fully funded or have a significant short fall of assets.
Executives have signaled that the company will be reporting weak November auto sales next week and that it is seeking to sell a controlling stake in GMAC, by far its most profitable unit, due to problems associated with its current junk bond status.
In addition to the retiree pension and health care issues, GM has been losing money on its core North American auto operations, which led the company to report a much larger than expected third quarter loss last week. It has yet to disclose when it expects to return to profitability.
-------------------------------------------------
Want to read more about cars? Click here
|
