Kessler Topaz Announces Action in Japan Against Nissan Motor Corporation

Kessler Topaz Meltzer & Check, LLP (“Kessler Topaz”) is organizing a shareholder action in Japan against Nissan Motor Co. Ltd. (“Nissan” or the “Company”). Kessler Topaz has hired Japanese counsel and will be preparing to file a complaint before the Tokyo District Court.

Nissan is a Japanese company that manufactures and sells automotive products and marine equipment. On November 19, 2018, Nissan’s former Chairman and the creator of an alliance between Nissan and Renault that effectively made Nissan the world’s largest automaker, Carlos Ghosn, was arrested in Japan over allegations of financial misconduct. An internal investigation at Nissan found that Mr. Ghosn had underreported his compensation to the Japanese government and used company assets for personal purposes. Greg Kelly, Nissan’s first American director and its former head of human resources was also arrested on charges. What initially appeared to be a scandal regarding the misdeeds of company executives, soon revealed that Nissan lacked strong internal checks and balances and other effective corporate governance measures. An April 2019 report by an independent panel revealed that the company’s internal controls had been lacking for a number of years. It found that the company’s CEO, Hiroto Saikawa, signed off on documents related to the underreporting of Mr. Ghosn’s compensation and that the company had made multiple misrepresentations to shareholders, falsified documents, and held numerous inadequate board meetings that lasted only twenty minutes. On September 23, 2019, Nissan and Mr. Ghosn settled charges with the U.S. Securities and Exchange Commission. Nissan was fined $15 million and Mr. Ghosn was fined $1 million for taking steps to avoid disclosing more than $140 million in compensation that was paid to the ex-chairman.

In response to the reports of Mr. Ghosn’s initial arrest on November 19, 2018, Nissan’s stock price dropped 5.67%. Since that initial report in November, Ghosn’s additional arrests and news about Nissan’s lack of effective internal controls have continued to impact its share price (including a share price decline of more than 20% between April and May 2019).

Recently, on December 10, 2019, The Japanese Securities and Exchange Surveillance Commission (“SESC”) recommended that the Japanese Financial Services Agency issue an administrative penalty against Nissan for approximately 2.5 billion JPY. In support of its recommendation, the SESC found that Nissan had violated its disclosure obligations in the Company’s Annual Securities Reports for the fiscal years 2011 through 2017.[1]

The following chart illustrates the movement of the price of Nissan stock during the proposed class period: