General Motors and Ford on Tuesday said the Securities and Exchange Commission has asked them to provide information on their pension and retiree health care plans as part of an inquiry into how companies prepare estimates used to calculate pension costs.
The Associated Press (AP) said the acknowledgments came a day after Delphi Corp. disclosed in a regulatory filing that the SEC had requested documents on its accounting related to pensions and retiree health benefits, which can affect the bottom line.
Confirming a report in BusinessWeek magazine, the SEC reportedly said its inquiry started with six companies it did not name. The SEC has no evidence of violations, but the companies were not selected randomly, Lawrence West, an associate director of enforcement at the agency, told AP.
GM spokeswoman Toni Simonetti told AP on Tuesday the automaker received a confidential request from the SEC last Thursday to provide information about its pension and post-retirement health care plans. Simonetti said the company was complying with the request.
Ford chief financial officer Don Leclair reportedly acknowledged receipt of the SEC request Tuesday during a conference call with analysts and automotive journalists to discuss Ford’s third-quarter earnings.
“Given the size of our pension and retiree health care obligations, I don’t think it’s surprising that a general SEC inquiry on these matters would include Ford,” Leclair said, according to the Associated Press. “We adhere to the highest accounting standards and will cooperate with the agency in this review.”
AP noted that company pension plans are among several areas being examined in the SEC’s new “risk-based inquiries” designed to anticipate problems that could lead to fraud and investor losses. Critics have suggested in recent years that some companies are using artificially high estimates of future rates of return on pension assets to lower their pension costs, thereby pumping up earnings.
