Revelations, negative revisions and write-downs are mounting in a broad range of firms that have been depending on financialization and accounting maneuvers to keep ‘beating’ targets over the past few years. The names may be different but the behaviors and gimmicks are all very familiar. Whether it be bank customers getting talked into ‘higher-yield product’ like collateralized deposits as a (precarious) place to put their savings [again] (see: Wall Street’s latest retail fleecing product exposed–structured CDO’s), or insider-trading and kickback schemes revealed (see: Former Amaya CEO was involved in kickback scheme, watchdog says), emissions-fraud at major car companies, or Suspect sales at Fiat Chrysler, this epidemic of deceit and recklessness has been one for the many storied books of financial scandal. Here is a taste of the Chrysler Fiat revelations coming to the fore:
“…Fiat Chrysler has impressed over the years with its steadily rising sales. The automaker’s monthly results, with their drum-like beat of incremental increases, evoke an earlier era when many U.S. companies engineered their earnings to surpass expectations by pennies to please Wall Street.
Investigators are examining whether Fiat Chrysler improperly adjusted monthly numbers to show growth over the prior year, a person familiar with the matter said. They are looking into allegations the company ordered dealers to create false vehicle purchases, some of which were made in the names of friends and relatives of salespeople, including underage family members, the person said.” See: Suspect sales at Fiat Chrysler could be bad news
The recalculation so far, means that the automaker’s previously reported sales-growth streak actually ended three years ago in 2013. For many companies and assets, the repricing needed will wipe out many years of apparent gains.