The credit arm of Ford Motor Co. has agreed to pay $700,000 in restitution to settle federal regulators' charges of promoting its Ford Money Market Account in a way that could mislead investors about its risk.
The Securities and Exchange Commission on Tuesday announced the settlement with Ford Motor Credit Co. over the marketing of the accounts in a $7.3 billion investment program. In sales materials, the accounts were promoted as being similar to traditional money-market accounts while investors actually were buying unsecured corporate debt of Ford Motor Credit — a riskier investment not insured by the government, the SEC said.
In addition to repaying $700,000 in allegedly ill-gotten gains, the company also agreed to pay $64,282 in interest, change the name of the investment so that it doesn't include the term "money market" and improve the disclosure information in sales materials. Ford Motor Credit neither admitted nor denied wrongdoing in the settlement but did agree to refrain from future violations of securities laws.
Although investors lost no money with the accounts, SEC officials said they wanted to avert potential problems by ensuring that investors fully understand the risks of buying corporate debt securities.
"Though bearing many of the outward characteristics of traditional money market accounts, debt offerings like the Ford Money Market Account ... are actually very different from money market investments and can carry significantly greater risk," Peter Bresnan, an associate director of the SEC's enforcement division, said in a statement. "For instance, an investor's sole recourse for these notes in the event of any sort of default is only the company itself."
The SEC has been investigating the $28 billion market for so-called corporate money-market debt offerings, agency Enforcement Director Linda Thomsen said.
Ford Motor Credit, in a statement issued from its headquarters in Dearborn, Mich., said it was pleased to have resolved the issue with the SEC. "The conclusion of this matter permits us to avoid the further cost and distraction of litigation," the company said.
