GM settles with SEC over accounting probe

General Motors Corp. escaped from a federal accounting probe without penalty Thursday when the automaker settled Securities and Exchange Commission allegations that GM’s mistakes violated federal laws.

The Detroit automaker will not be fined and did not admit or deny wrongdoing. The allegations involved “materially misleading disclosures” dating back to 2000 about how much money GM was earning on its pension fund investments, errors in accounting for derivatives, and improper accounting for the sale and repurchase of precious metals.

GM, which received a $13.4-billion loan commitment from the federal government last month to keep it out of bankruptcy, had been forced to restate earnings from 2000 through 2006.

The company said the SEC never alleged fraud or other intentional violations.

The SEC and GM both said the settlement, which must be approved by a U.S. District Court judge in Washington, ends all outstanding SEC investigations of GM. An SEC civil complaint filed with the court asks for an order telling GM not to violate accounting laws again.

“It’s a sin-no-more injunction,” said Peter Henning, a former SEC attorney who teaches at the Wayne State University Law School in Detroit. “It’s a books-and-records reporting case, not a securities fraud case.”

The deal resolves an SEC investigation that began in 2004 as part of a wide-ranging examination of pension accounting practices at a number of big companies.

The violations, Henning said, came during a time when many companies pushed the limits of securities laws with their accounting methods, at times overstating items such as pension fund earnings.

“This may be one of the last cases we see coming out of an era in which companies were very aggressive in their accounting,” he said. “Some of this was not just poor accounting but also aggressive accounting.”