Risk & Compliance

SEC Seeks Lobbying Records From Navistar

Did the engine manufacturer mislead investors? The SEC wants a court to order the company to turn documents over to investigators.
Matthew HellerFebruary 2, 2015
SEC Seeks Lobbying Records From Navistar

The U.S. Securities and Exchange Commission has asked for a court order requiring Navistar to turn over information that it says “bears directly” on whether the engine maker made false statements to investors.

The SEC has been investigating Navistar since July 2012 in connection with statements the company made about its efforts to obtain a document from the U.S Environmental Protection Agency certifying its engines complied with certain provisions of the Clean Air Act.

According to the SEC, Navistar has produced “many documents in response to the commission’s subpoenas, but it also has redacted and withheld other documents on privilege grounds,” including certain communications with law firms and public relations firms it hired to lobby on its behalf.

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In a subpoena enforcement action filed in federal court, the SEC says no privilege applies to the lobbying-related records and a judge should order Navistar to turn them over to investigators.

“This information bears directly on whether Navistar’s understanding of the progress of its efforts to obtain EPA certification, as reflected in its lobbying efforts and its communications with others, was consistent with its public statements regarding this issue,” the SEC explained in its complaint.

As a manufacturer of heavy-duty diesel engines, Navistar must obtain a certificate of conformity from the EPA each year for each type of engine that it sells. The SEC is investigating whether management deliberately downplayed compliance problems in disclosures to the public and has subpoenaed documents from ASGK Public Strategies and the law firms of Alston & Bird, Mayer Brown LLP, and Williams & Jensen.

The members of Alston & Bird’s lobbying team included former GOP presidential nominee Bob Dole and former U.S. Senator Blanche Lincoln.

Navistar has asserted the attorney-client privilege and work product rule in redacting or withholding records. A company spokesman said the dispute is over a “relatively small number of documents” and Navistar believes it has complied with the SEC’s discovery requests.

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