The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

January 29, 2019

The Long Arm of the Law: Nissan Now Facing SEC Inquiry

Liz Dunshee

Last fall, Broc wrote in regards to the Nissan/Carlos Ghosn saga that, yes, you can get caught for not disclosing perks – and deferred comp – in other countries. And after that, Japanese regulators formally indicted Nissan’s former chair – and the company itself – for under-reporting executive pay (this NYT article has details). Now, since Nissan ADRs trade on the Pink Sheets, the SEC is joining the party.

According to this Bloomberg article, the Commission is investigating whether Nissan accurately disclosed its executive pay in the US and whether it had adequate controls to prevent improper payments. This excerpt explains why the SEC might have jurisdiction:

Nissan shares trade in the U.S. via American Depositary Receipts, which generally gives the SEC enforcement authority. U.S. courts have disagreed about whether the regulator has jurisdiction in certain cases where wrongdoing occurred abroad. The activities under scrutiny at Nissan to date took place mostly in Japan and Europe. But the SEC believes it has authority in this instance, according to one of the people familiar with the matter.

This Bloomberg article explains how the carmaker’s reporting of deferred compensation may have violated Japanese reporting laws – and this Nissan announcement about the results of their internal investigation says they’ll consider clawing back all payments to Carlos Ghosn that were the result of misconduct.