Navistar has agreed to pay $7.5 million to settle charges that it misled investors about its efforts to obtain regulatory approval for an advanced technology truck engine.

The U.S. Securities and Exchange Commission said Navistar failed to disclose the difficulties it was having in obtaining a document from the Environmental Protection Agency certifying the engine met tougher nitrogen oxide emission standards that went into effect in 2010.

Navistar’s public statements “created the misimpression that the certification process was proceeding as it typically did and that the forthcoming engine would be commercially competitive,” the SEC said in an administrative order.

The agency separately charged former CEO Daniel Ustian with leading a “campaign of deception” about the certification efforts. As Crain’s Chicago Business reports, he had made a “huge bet” on the exhaust gas recirculation (EGR) engine, investing some $700 million in its development.

Rather than admit his bet failed, “Ustian engaged in a progressively desperate and fraudulent scheme to deceive the investing public into believing that EPA certification of a competitive EGR-only engine that met . . . [EPA standards] was right around the corner,” the SEC said in a civil complaint.

Navistar did not admit or deny the charges. “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,” a spokeswoman said.

Manufacturers of heavy-duty diesel engines must obtain a certificate of conformity from the EPA each year for each type of engine that they sell. In February 2012, EPA staff raised “several serious concerns” about Navistar’s EGR engine but according to the SEC, Ustian indicated in a conference call with analysts and investors that certification was proceeding in a typical timeframe and that Navistar could begin production on the engine in June 2012.

The SEC said Navistar made further misleading statements in its June 2012 quarterly filing. A month later, it withdrew its application for certification of the EGR engine.

“When public companies and top executives discuss important regulatory developments with investors, they must tell the whole truth,” Andrew J. Ceresney, director of the SEC’s Division of Enforcement, said in a news release.

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