The New York-based probe is in its early stages, and the source did
not elaborate on the legal theory behind the potential criminal
Federal investigators are reviewing information about how GM handled
reports of problems with ignition switches that first came to light
10 years ago, according to the source.
The source did not want to be named because the probe has not been
GM declined to comment on Tuesday. Shares of GM closed down 5
percent to $35.18 on the New York Stock Exchange.
The federal probe by the U.S. attorney in Manhattan adds to a
growing list of U.S. authorities examining the recall, which GM
announced in February. The National Highway Traffic Safety
Administration (NHTSA) previously opened an investigation into
whether GM reacted swiftly enough in its recall.
Earlier on Tuesday, Reuters reported that a U.S. Senate committee
chairman is seeking a hearing on the issue. The U.S. House Energy
and Commerce Committee also ordered GM and NHTSA to turn over
information about GM's ignition switch problems.
The problems in some instances allowed the engine and other
components, including front airbags, to turn off while the vehicle
was traveling at high speed. More than 1.6 million older vehicles
The failure is believed to be caused when weight on the ignition
key, road conditions or some other jarring event causes the ignition
switch to move out of the "run" position, turning off the engine and
most of the car's electrical components mid-drive, with sometimes
GM has recommended that owners use only the ignition key with
nothing else on the key ring.
The supplier of the ignition switch, Delphi Automotive Plc, said in
a statement on Tuesday that the part had not been provided to any
One analyst said the recall could have a longer-term impact on GM.
"The immediate financial impact is insignificant; however, there
could be some reputational risk which could impact share," RBC
Capital markets analyst Joseph Spak said.
"Obviously, the longer this stays in the headlines the worse it
could be for GM," he said.
TWO WEEKS TO RESPOND
GM is conducting an internal investigation into the matter and
announced earlier this week that the probe would be led by Anton
"Tony" Valukas, the chairman of law firm Jenner & Block.
The criminal probe of GM opened by Manhattan U.S. Attorney Preet
Bharara follows an investigation conducted by the same office into
Toyota's disclosure in 2009 of driver complaints of unintended
acceleration by some of its vehicles.
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Toyota has been engaged in negotiations with Bharara's office to
settle that probe, which is also criminal, a source familiar with
the investigation previously told Reuters.
The House committee examining the GM issue, led by Michigan
Republican Fred Upton, gave the company and NHTSA until March 25 to
turn over information about their responses to consumers' complaints
about the problem.
The committee has asked GM officials to provide a briefing no later
than March 18 on how GM has responded to reports of incidents since
2003 and its interaction with NHTSA since then on problems related
to the ignition defect.
Upton led the 2000 investigation into Firestone tire failures on
Ford Motor Co vehicles, resulting in the TREAD Act that requires
automakers to report complaints of defects to the NHTSA.
That law also makes it a crime to intentionally mislead the agency
about defects that lead to serious accidents.
The Justice Department can only open a grand jury investigation into
such allegations at the request of the U.S. Transportation
Secretary, according to the law.
"We are in communication with the Department of Justice but have not
asked Justice to investigate because we are still in the midst of
our own investigation regarding the timing of GM's recall," a
Transportation Department spokesman said in a statement.
The person familiar with the criminal probe declined to discuss
whether prosecutors were considering liability under the TREAD Act.
(Additional reporting by Eric Beech and
Richard Cowan; editing by Karey Van Hall and Andrew Hay)
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