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SEC Investigating Nissan Over Carlos Ghosn’s Pay

The Securities and Exchange Commission is investigating whether Nissan (NSANY) accurately disclosed Carlos Ghosn’s pay in the U.S.

Reports by Bloomberg and The Wall Street Journal Monday, say the financial regulator is examining the accuracy of Nissan’s disclosures to ascertain if the auto firm maintained adequate controls to prevent improper payments. Nissan confirmed to both outlets that it has received an SEC inquiry and said it is cooperating fully but would not provide further details.

Nissan and Ghosn have been charged in Japan with underreporting the former chairman’s compensation by more than $80 million over eight years. Ghosn, who has been held in jail since his arrest on Nov. 19, maintains his innocence. Nissan has expressed regret over the potential impact to shareholders but hasn’t said if it will contest the charges.

French President Emmanuel Macron told Japanese Prime Minister Shinzo Abe yesterday that Ghosn’s detention was “too long and too hard,” Bloomberg reports. “I’m just concerned that the case of a French citizen should respect basic decency,” Macron told reporters in Cairo. Lengthy pre-trial detentions are not unusual in Japan, and officials there maintain they are abiding by the rule of law.

Japanese authorities arrested Ghosn and another company director, Greg Kelly, in November after a months-long internal investigation at Nissan. Both men deny any wrongdoing; Kelly was released on bail over Christmas.

Ghosn resigned as chairman and CEO of Renault, Nissan’s largest shareholder, on Jan. 23. He had already been ousted as chairman of Nissan and Mitsubishi shortly after his arrest. Renault named Michelin CEO Jean-Dominique Senard as his replacement, and Macron has reportedly suggested Senard should be made Nissan’s chairman as well. France’s government owns 15% of Renault.

Renault-Nissan alliance executives are meeting this week in Amsterdam, Bloomberg reports. It will be the first meeting since Ghosn quit. Nissan CEO Hiroto Saikawa, a former protege of Ghosn who led the investigation into his former boss, said he intends to step down in coming months after reforming the poor governance he believes weakened the company.

While the SEC’s civil inquiry is in its early stages and may not point to wrongdoing, it could seek financial penalties and injunctions to prevent violation of laws or SEC rules. U.S. courts have disagreed about whether the regulator has jurisdiction in certain cases where wrongdoing occurred abroad, but Nissan shares trade in the U.S. via American depositary receipts, which falls under the SEC’s purview.