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SEC Goes to Court As Navistar Withholds Documents Related to Probe

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The SEC emphasized that some of Navistar’s privilege claims to redact and withhold documents related to its fraud investigation are improper

The Securities and Exchange Commission (SEC) filed an enforcement action against Navistar International after the company withheld documents related a fraud investigation against it.

The commission said Navistar International is refusing to handover the documents based on improper privilege claims in response to its investigative subpoenas.

SEC is investigating Navistar’s statement related to EPA approvals

The SEC is requesting the court to order the Navistar International handover the documents in connection with the company’s statements regarding its efforts to obtain approvals from the Environment Protection Agency (EPA) certifying that its engines complied with certain provisions of the Clean Air Act.

According to the SEC, Navistar International is compelled to produce the documents pursuant to investigative subpoena. The commission emphasized that the company submitted many documents, but it redacted and held back other documents based privilege grounds.

SEC argued that Navistar’s privilege claims are improper

In its filing, the SEC emphasized that its staff did not question many of the privilege assertions of Navistar International. However, the staff believes that some of its privilege claims are incorrect, which led to the company’s “improper redaction and withholding of many documents.”

For this reason, the SEC filed an Application for an Order Compelling Compliance with Administrative Subpoenas at the U.S. District Court for the Northern District of Illinois.

The commission is seeking a court order compelling Navistar International to produce the documents that were improperly redacted by the company as well the withheld documents claimed as privileged.

According to the SEC, its investigation against the company is on-going and it has not concluded that any one violated the law.

Previous EPA rulings on heavy-duty diesel engines

In 2001, the EPA required manufacturers to comply with the Clean Air Act, and required a 95 percent reduction of nitrogen oxide emission from heavy-duty diesel engines by 2010

Navistar invested $700 million in a technology called exhaust gas recirculation to comply with the emission standards set by the agency, but it was a failure. The truck maker informed the agency that it was running out of credit.

In August 2012, EPA approved the sale of engines that did not meet the carbon emissions standards, but the company will pay a higher fine of $3,800 per engine. It is uncertain whether this is part of the SEC investigation.

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